Cloud computing stocks surge up to 6% on AI infrastructure demand

Cloud computing stocks climbed across the board Monday, with NEBIUS leading gainers at 6%, as AI infrastructure spending and enterprise cloud migration continued to drive sector-wide momentum.

Cloud computing stocks rallied in early trading Monday, with NEBIUS surging 6% and Oracle adding 5%, as sustained AI infrastructure investment and enterprise digital transformation fueled broad-based demand across the sector.

"The cloud sector is benefiting from a structural shift as enterprises accelerate AI adoption and data center expansion," analysts at Zacks Investment Research wrote in a note, citing Google Cloud's 64.8% expected earnings growth for the current year.

CoreWeave rose 4%, IREN gained 3%, and Google parent Alphabet added 3%, while Microsoft climbed 2%. Alphabet's consensus earnings estimate has improved 24.6% over the past 60 days, according to Zacks data, reflecting optimism around Google Cloud's AI infrastructure offerings including Vertex AI and Gemini Enterprise.

The rally shows how deeply cloud computing has become intertwined with the AI boom. Enterprises that delayed technology investments are now committing budgets to cloud migration and AI workloads, creating a recurring revenue base for providers. With Alphabet shares up 4.3% year to date and Oracle trading near record levels, the sector's valuation has expanded, but analysts expect continued earnings growth to support current multiples.

Hyperscaler CapEx Cycle Shows No Signs of Slowing

The three largest US cloud providers — Amazon Web Services, Microsoft Azure and Google Cloud — collectively spent more than $60 billion on data center infrastructure in the most recent quarter, according to company filings. That spending is flowing to companies like CoreWeave, a GPU-focused cloud provider that has raised billions in debt financing to expand capacity, and NEBIUS, an AI cloud platform whose stock has more than doubled this year. IREN, which operates data centers powered by renewable energy, has benefited from hyperscaler demand for sustainable computing capacity.

Enterprise Migration Adds a Second Growth Engine

Beyond AI, the broader enterprise shift to cloud-native applications is providing a second tailwind. Companies are modernizing legacy software, migrating critical workloads and adopting cloud-based cybersecurity tools, creating demand that extends beyond AI infrastructure. Microsoft's Azure revenue growth accelerated last quarter, driven by both AI services and traditional cloud migrations, while Oracle's autonomous database and cloud ERP offerings have gained share among large enterprises.

For investors, the cloud computing rally presents a question of valuation versus durability. Alphabet trades at roughly 22 times forward earnings, while Microsoft commands a premium near 30 times. If AI-driven cloud revenue continues to compound at current rates, the sector's growth could justify those multiples. But any slowdown in enterprise spending or a pullback in AI-related CapEx could trigger a re-rating. The upcoming earnings season, with reports due from Microsoft and Alphabet in the coming weeks, will provide the next major test of whether the sector's momentum can hold.

This article is for informational purposes only and does not constitute investment advice.