December 25, 2025 — U.S. markets are closed for Christmas, but investor focus hasn’t slowed. Cloud computing stocks are heading into 2026 at the center of two powerful, and sometimes conflicting, narratives: an AI-fueled infrastructure boom that’s reshaping corporate spending, and growing skepticism about whether today’s capital outlays will translate into tomorrow’s profits. [1]
What follows is a news-and-analysis roundup current as of 25.12.2025, highlighting the most consequential developments, forecasts, and investor debates shaping cloud stocks right now—spanning hyperscalers (Amazon, Microsoft, Alphabet), “challengers” (Oracle), and cloud software leaders (ServiceNow, Snowflake).
Why cloud computing stocks matter more than ever heading into 2026
Cloud is no longer just “renting servers.” It’s quickly becoming the operating layer for AI—where enterprises train models, run AI agents, deploy security controls, and store the data that makes those systems valuable.
Recent research cited this week puts hard numbers behind that shift: global cloud infrastructure services spending hit $102.6 billion in Q3 2025, up 25% year over year, marking the fifth straight quarter above 20% growth. AWS, Azure, and Google Cloud collectively accounted for 66% of that spending. [2]
That’s the demand backdrop. The more controversial part is how it’s being funded—and what it means for margins.
The AI capex supercycle is powering the cloud… and pressuring balance sheets
Two themes dominate late-December coverage:
1) AI infrastructure spending forecasts keep climbing
A Financial Times analysis published today argues the AI upheaval “shows little sign of lessening,” pointing to extraordinary projections for data center buildouts and ongoing investment momentum into 2026. [3]
2) Even cash-rich tech is borrowing more to build cloud and AI capacity
Reuters reports global tech companies issued $428.3 billion of bonds in 2025 (through the first week of December, per Dealogic), as the race to expand AI and cloud capacity pushes companies to fund huge buildouts. Reuters also notes that credit markets are beginning to reflect caution, citing rising CDS spreads for names including Oracle and Microsoft. [4]
For cloud computing stocks, this sets up a key 2026 question:
Will cloud leaders convert AI-driven demand into durable free cash flow—or will capex and competitive pricing erode the payoff?
Hyperscalers: AWS, Azure, and Google Cloud still dominate (and the data shows it)
The Q3 2025 spending snapshot helps explain why cloud stocks remain central to market narratives:
- AWS: 32% market share; 20% year-over-year revenue growth (its strongest performance since 2022, according to Omdia as cited by IT Pro). [5]
- Microsoft Azure: 22% market share; 40% year-over-year revenue growth. [6]
- Google Cloud: 11% market share; 36% year-over-year growth, helped by enterprise AI offerings. [7]
Those growth rates matter because they anchor the “quality” case for cloud computing stocks—especially when investors weigh valuation concerns against durable revenue engines.
Microsoft (MSFT): Wall Street sees upside—but legal and regulation risks are rising
The bullish case: Azure + AI leadership
A Barron’s analysis this week highlights a strong 2026 outlook from Wedbush’s Dan Ives, including an “Outperform” view and a $625 price target, arguing the market is still underestimating Microsoft’s AI-driven potential. The same coverage points to Azure posting 40% year-over-year growth in the most recent quarter and suggests AI could consume a growing share of Azure capacity over the next few years. [8]
Investopedia echoed that theme in a separate report, citing Wedbush analysts arguing Microsoft has room to run in 2026 after pulling back from record highs, with Azure positioned as a major value driver as AI expands. [9]
The risk case: cloud licensing practices under scrutiny
Microsoft’s cloud strategy is also facing regulatory and legal pressure. Reuters reports Microsoft is fighting a £2.1 billion (about $2.81 billion) UK lawsuit alleging it overcharged businesses for using Windows Server on rival clouds (like AWS and Google) versus Azure, with regulators in multiple regions examining cloud practices. [10]
What investors are watching in 2026: whether Microsoft can maintain Azure’s momentum while absorbing AI capex and navigating a tightening regulatory climate around cloud competition.
Amazon (AMZN): AWS remains the profit engine, and 2026 catalysts are stacking up
Even on a quiet holiday news day, the near-term outlook for cloud computing stocks keeps circling back to AWS.
AWS: the core driver investors can’t ignore
A Nasdaq-hosted Motley Fool analysis (published December 21) frames AWS as critical to the 2026 story, citing third-quarter AWS revenue of $33 billion and operating income of $11.4 billion, while arguing that AI-related infrastructure investment is likely to remain significant. The piece also points to management forecasting $125 billion in capex for 2025 (with potential increases next year), largely tied to data centers and chips. [11]
What the Street is signaling into 2026
Barron’s “12 Stocks That Are Gifts for 2026” (published today) flags Amazon and Microsoft among the names with very high buy ratings and substantial implied upside based on analyst targets—though the article emphasizes stock screens are starting points, not guarantees. [12]
What investors are watching in 2026: whether AWS can keep accelerating as AI workloads move from experimentation into production—and whether Amazon’s heavy AI capex translates into expanding operating leverage rather than margin compression.
Alphabet (GOOGL): Cloud security wins and the race for power become the moat
Alphabet’s cloud narrative entering 2026 has two unusually tangible components: security (revenue and stickiness) and electricity (capacity and speed).
Google Cloud + Palo Alto Networks: a massive security partnership
Reuters reports Google Cloud and Palo Alto Networks expanded their partnership in a deal one source described as approaching $10 billion over several years—reportedly Google Cloud’s largest security services deal. The spending includes migrating Palo Alto offerings to Google Cloud and developing AI-driven security services, underscoring how AI is driving demand for cybersecurity in the cloud era. [13]
Alphabet buys Intersect to secure energy for AI data centers
Alphabet’s push to lock in power is even more direct. Reuters reports Alphabet agreed to acquire clean energy developer Intersect for $4.75 billion (cash plus assumed debt) as power needs for AI and data centers surge. Reuters notes Intersect has $15 billion in assets operating or under construction, and projects representing about 10.8 gigawatts are expected to be online or in development by 2028. [14]
AP adds context on the AI-driven electricity demand pressures, reporting the deal is aimed at meeting the growing power needs of AI and data centers, with the company expecting the transaction to close in the first half of next year. [15]
What investors are watching in 2026: whether Google Cloud converts security and AI momentum into greater enterprise share—and whether Alphabet’s power strategy becomes a differentiator (or a capital-intensive burden).
Oracle (ORCL): The most volatile cloud stock story, now balancing huge backlog with capex fears
Oracle is arguably the most debated “cloud computing stock” heading into 2026, because its opportunity set has expanded fast—and so have investor concerns.
The growth case: OCI is scaling quickly
In Oracle’s FY2026 Q2 results (reported December 10), the company reported:
- Cloud revenue (IaaS + SaaS): $8.0 billion, up 34%
- Cloud Infrastructure (IaaS): $4.1 billion, up 68%
- Remaining Performance Obligations: $523 billion, up 438% [16]
Those numbers support the bull case that Oracle Cloud Infrastructure (OCI) is becoming a meaningful AI-era capacity provider—especially for data-intensive enterprise workloads.
The skepticism: capex, debt, and “AI bubble” fears
Reuters reported earlier this month that Oracle shares sank after dour forecasts and surging spending stoked concerns about how quickly AI bets will pay off, noting Oracle’s fiscal 2026 capex expectations were raised versus prior estimates and that brokerages cut price targets following results. [17]
Another Reuters report highlights uncertainty around Oracle’s AI infrastructure expansion plans, including financing and partner dynamics for a major Michigan data center project linked to an Oracle/OpenAI infrastructure push. [18]
Today’s view: Oracle’s 2026 path may be rockier
A Barron’s feature published today calls Oracle’s year “topsy-turvy,” emphasizing stock volatility and the complexities around its cloud transition, margins, and the market’s reaction to large AI-linked contracts. [19]
What investors are watching in 2026: whether Oracle can execute on buildouts and monetize backlog without letting capex and debt dominate the equity story.
Cloud software stocks: security, data platforms, and consolidation are reshaping the field
Cloud computing stocks aren’t only hyperscalers. Software platforms that run on the cloud—and increasingly bundle AI—are making aggressive moves to defend their position.
ServiceNow (NOW) buys Armis for $7.75B
Reuters reports ServiceNow agreed to buy cybersecurity startup Armis for $7.75 billion, its biggest-ever deal, aiming to strengthen security capabilities as AI-driven threats rise. Reuters notes ServiceNow expects the deal to close in the second half of 2026 and believes it can significantly expand the market opportunity for its security and risk business. [20]
This matters for cloud stock investors because cybersecurity is becoming embedded into cloud workflows—not just a standalone product category.
Snowflake (SNOW): AI traction, but pricing pressure is real
Snowflake remains a key “cloud data platform” stock, and Reuters reports the company’s shares tumbled earlier this month after it forecast slower product revenue growth, partly tied to discounts on large, long-term deals. At the same time, Reuters notes multiple brokerages raised price targets, citing adoption of Snowflake’s AI offerings and increasing customer engagement with AI features. [21]
Snowflake has also been linked to consolidation chatter. Investor’s Business Daily reported Snowflake was in talks to acquire Observe for about $1 billion (as of December 24 coverage), reinforcing the view that cloud software M&A could pick up as platforms compete to offer end-to-end AI and observability stacks. [22]
What investors are watching in 2026: whether cloud software companies can defend pricing while expanding AI features—and whether M&A accelerates as firms try to build full-stack platforms.
The cloud stocks checklist for 2026: what to watch (and why it matters)
Based on today’s reporting and the latest late-December analysis, here are the themes most likely to move cloud computing stocks in 2026:
- AI workloads moving into production
- Q3 spending data suggests enterprise AI demand is rising, but the real inflection is widespread production deployment—not pilot programs. [23]
- Security becomes a growth engine, not just a cost
- Google Cloud’s expanded partnership with Palo Alto and ServiceNow’s Armis acquisition both point to security spend increasing alongside AI adoption. [24]
- Power and infrastructure constraints shape who can grow
- Alphabet’s Intersect acquisition is a loud signal: electricity and energy infrastructure can be strategic bottlenecks for cloud expansion. [25]
- Balance sheet durability matters again
- With debt issuance rising across tech to fund AI/cloud buildouts, investors are paying closer attention to leverage, coverage ratios, and the “time to payoff” on AI capex. [26]
- Regulation and cloud competition risks
- Microsoft’s UK case underscores a growing scrutiny of how software licensing and cloud market power interact—an issue that can affect pricing flexibility across the sector. [27]
Bottom line on cloud computing stocks as of Dec. 25, 2025
Cloud computing stocks are entering 2026 with clear demand tailwinds—spending is up, AI workloads are driving new projects, and hyperscalers are still gaining from the market’s shift to cloud-first infrastructure. [28]
But this cycle is different from prior cloud eras because the capital intensity is higher, the security stakes are higher, and key constraints (like electricity and data center capacity) are now strategic variables. Meanwhile, debt-funded expansion and regulatory scrutiny are forcing investors to separate “revenue growth” stories from “quality of earnings” stories. [29]
As markets reopen after the holiday, the winners in cloud stocks are likely to be the companies that can answer one simple 2026 question better than their rivals:
Can you scale AI-era cloud demand while expanding—or at least defending—free cash flow?
This article is for informational purposes only and is not investment advice.
References
1. www.investors.com, 2. www.itpro.com, 3. www.ft.com, 4. www.reuters.com, 5. www.itpro.com, 6. www.itpro.com, 7. www.itpro.com, 8. www.barrons.com, 9. www.investopedia.com, 10. www.reuters.com, 11. www.nasdaq.com, 12. www.barrons.com, 13. www.reuters.com, 14. www.reuters.com, 15. apnews.com, 16. investor.oracle.com, 17. www.reuters.com, 18. www.reuters.com, 19. www.barrons.com, 20. www.reuters.com, 21. www.reuters.com, 22. www.investors.com, 23. www.itpro.com, 24. www.reuters.com, 25. www.reuters.com, 26. www.reuters.com, 27. www.reuters.com, 28. www.itpro.com, 29. www.reuters.com
