Anthropic Growth and Bedrock Mix Drive AWS Margins Higher While Peers Lag

Jeremie Eliahou Ontiveros · SemiAnalysis · May 27, 2026 at 16:25 · ⏱ 20 min read  | Read on Substack ↗
Summary
AWS margins are inflecting upward due to its Bedrock token-as-a-service model and favorable Anthropic deal terms, while Azure, Google Cloud, Oracle, and CoreWeave see flat or declining margins. The article argues that Amazon's vertical integration (Trainium, Graviton), aggressive capacity buildout, and revenue-sharing structure with Anthropic create a durable margin advantage that peers cannot replicate, making AWS the standout among cloud providers.
  • •AWS EBIT margins increased 213bp Q/Q in 1Q26, driven by Anthropic/Bedrock spending growth.
  • •Bedrock is a $5.5B run-rate business with 80-90%+ of customers using Anthropic models; revenue grew 170% Q/Q in 1Q26.
  • •Anthropic added $21B net new ARR in 1Q26, reaching $30B ARR, primarily from enterprise API usage of Claude Code.
  • •AWS AI mix is 10% of total revenue vs GCP 36% and Azure 27%, but Bedrock's higher-margin TaaS model gives AWS better profitability.
  • •Amazon has secured more power than any cloud provider except Google and is adding capacity faster than peers, with a new modular datacenter design.
  • •Microsoft's datacenter pause lowered its 2027 capacity forecast, forcing reliance on expensive neoclouds.
  • •Google Cloud's margin rise is inflated because DeepMind training costs ($5.4B in 1Q26) are excluded from GCP segment reporting.
  • •Amazon's custom Trainium chips now power >50% of Bedrock token usage, and Graviton provides cost advantages for CPU workloads.
Read time 20 min
Length 20,282 chars
Category finance
Trade Ideas
Jeremie Eliahou Ontiveros Substack author, SemiAnalysis
The article extensively details AWS's margin inflection driven by Bedrock/Anthropic deal structure, vertical integration (Trainium, Graviton), and capacity advantages, positioning Amazon as the only C
The article extensively details AWS's margin inflection driven by Bedrock/Anthropic deal structure, vertical integration (Trainium, Graviton), and capacity advantages, positioning Amazon as the only CSP with rising margins. This supports a positive thesis on Amazon's cloud business profitability. Risk: Dependence on Anthropic concentration; potential renegotiation of deal terms could reduce margins.
AMZN
Jeremie Eliahou Ontiveros Substack author, SemiAnalysis
The article notes Azure margins are declining, with AI business heavily IaaS-driven (80%+ of AI revenue) and capacity constrained after a datacenter pause, forcing reliance on expensive neoclouds. Mic
The article notes Azure margins are declining, with AI business heavily IaaS-driven (80%+ of AI revenue) and capacity constrained after a datacenter pause, forcing reliance on expensive neoclouds. Microsoft's Copilot and GitHub efforts are described as lacking traction. Risk: Margin compression could worsen as competitive pricing pressures increase.
MSFT
Jeremie Eliahou Ontiveros Substack author, SemiAnalysis
Google Cloud's margin rise is called an 'illusion' because DeepMind training costs ($5.4B run rate) are excluded from GCP segment, and the company is supply-constrained with capacity insufficient to s
Google Cloud's margin rise is called an 'illusion' because DeepMind training costs ($5.4B run rate) are excluded from GCP segment, and the company is supply-constrained with capacity insufficient to serve both internal AI and cloud growth. Risk: If Alphabet-level costs are reallocated, GCP margins could revert sharply.
GOOGL
Jeremie Eliahou Ontiveros Substack author, SemiAnalysis
CoreWeave (Coreweave) is explicitly called out as disappointing the market with lower-than-expected profits, and its business model is contrasted unfavorably with hyperscaler TaaS margins.
CoreWeave (Coreweave) is explicitly called out as disappointing the market with lower-than-expected profits, and its business model is contrasted unfavorably with hyperscaler TaaS margins. Risk: Neoclouds face structural margin disadvantages vs vertically integrated hyperscalers.
CRWV
Jeremie Eliahou Ontiveros Substack author, SemiAnalysis
Oracle is explicitly cited as having disappointed the market with lower-than-expected profits from its cloud arm, and its TaaS business is described as 'practically nothing' compared to hyperscalers.
Oracle is explicitly cited as having disappointed the market with lower-than-expected profits from its cloud arm, and its TaaS business is described as 'practically nothing' compared to hyperscalers. Risk: Lack of high-margin TaaS revenue leaves Oracle exposed to IaaS margin pressure.
ORCL
Jeremie Eliahou Ontiveros Substack author, SemiAnalysis
The article mentions Google acting as an IP vendor for TPU sales to Anthropic through Broadcom, implying Broadcom benefits from custom chip design revenue as Google's TPU partner.
The article mentions Google acting as an IP vendor for TPU sales to Anthropic through Broadcom, implying Broadcom benefits from custom chip design revenue as Google's TPU partner. Risk: Dependence on Google's strategic decisions; competition from other ASIC vendors.
AVGO
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This newsletter, published May 27, 2026, features Jeremie Eliahou Ontiveros discussing AMZN, MSFT, GOOGL, CRWV, ORCL, AVGO. 6 trade ideas extracted by AI with direction and confidence scoring.

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