AWS Web Metrics show strong cloud consumption momentum in Q1'26 and early Q2

Overview

This report uses AWS SSO web engagement as a leading indicator of cloud workload demand and updates trends at the end of Q1'26 and the beginning of Q2'26. The report believes Q1'26 did not face the special negative factors that dragged on IT spending from 2023 to 2025, and that web metrics were significantly stronger than in the same periods of post-pandemic history, indicating that AWS core ex-AI revenue and cloud consumption-related software companies still have strong near-term fundamental support.

Core views

The core views are: first, although Q4'25 web metrics softened somewhat at year-end, overall strength was sufficient to support continued acceleration in AWS ex-AI revenue in Q1'26; second, Q1'26 web metrics point to another roughly 100bps acceleration in Q2; third, AWS is benefiting not only from a recovery in core enterprise cloud consumption, but also from rapidly growing revenue related to AI services, Trainium, and Graviton; fourth, AWS trends can read across to cloud consumption-related companies such as Datadog, Cloudflare, Twilio, MongoDB, and Snowflake.

Analysis framework

The report performs a lagged regression between engagement traffic on AWS SSO pages and AWS ex-AI revenue growth, arguing that prior-quarter SSO engagement leads current-quarter revenue recognition by about one quarter; combined with CIO budget surveys, historical holiday disruptions, macro events, and revenue correlations with cloud consumption-related companies, it assesses the direction of cloud spending in 2026.

Methodology notes

• Alternative data / leading indicatorsAWS SSO web metrics regression

  AWS SSO engaged traffic leads AWS ex-AI revenue by about one quarter

  The report argues that interactions by human developers and operations personnel with the AWS SSO interface represent actual cloud project workloads, which subsequently convert into cloud consumption and are more fully reflected in revenue in the following quarter.

• Peer read-acrossCloud consumption-linked read-across

  AWS ex-AI trends read across to cloud consumption companies such as DDOG, NET, and TWLO

  As a major cloud service provider, AWS is viewed as a barometer of overall cloud workloads; the report uses the historical correlation between AWS ex-AI revenue and the related revenue of Datadog, Cloudflare, and Twilio to assess the read-across impact.

• Data adjustmentOutlier and methodology adjustment

  Exclude outliers caused by one-off discounts and changes in data methodology

  The report explains that the charts exclude outliers in Q1-Q2'23 caused by AWS one-time discounts and customer retention credits, as well as discontinuities in Q1-Q3'24 caused by changes in the web-metric vendor's data collection/estimation methodology.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• AMZN / Amazon Web Services

  Core covered asset and source of indicators

  Strengths

  Strong AWS SSO data, AI services ARR above $15B, rapidly expanding annualized revenue from Graviton and Trainium, and OpenAI and Anthropic deals boosting Trainium sentiment.

  Weaknesses

  H2'26 will face the high comparison base of the strong ramp in H2'25 IT projects, while core enterprise cloud spending itself is more of a confirmation item.

  Comparison

  Q1'26 and early Q2 web metrics are stronger than each post-pandemic year; 2023 was affected by cloud cost optimization and the SVB shock, 2024 by AI-priority disruptions, and 2025 by DOGE and tariff/macro issues.

  Risks

  AI cloud revenue underperforms expectations, core cloud consumption declines, or macro shocks / geopolitics cause IT projects to pause.

• DDOG

  Read-across beneficiary from AWS cloud consumption

  Strengths

  The report believes Datadog ex-AI revenue is highly correlated with AWS ex-AI revenue, and increased cloud migration and platform software budgets are beneficial to it.

  Weaknesses

  Valuation and revenue cadence may be sensitive to short-term cloud consumption fluctuations.

  Comparison

  Compared with TWLO and NET, the report maintains an Outperform rating on DDOG with a target price of $180.

  Risks

  AWS consumption trends weaken, customers optimize cloud usage, or AI projects crowd out traditional IT budgets.

• NET

  Read-across name in cloud-native infrastructure and cybersecurity

  Strengths

  Over the past two years, Cloudflare has shown a relatively strong correlation with AWS ex-AI quarter-over-quarter revenue growth, and strong AWS trends provide demand support.

  Weaknesses

  The report maintains a Market-Perform rating, with a target price below the current price, implying valuation or risk-reward constraints.

  Comparison

  NET has a strong regression relationship with AWS ex-AI, but its rating is below AMZN and DDOG.

  Risks

  High valuation, slowing growth, and macro or budget disruptions.

• TWLO

  Read-across name in developer communications infrastructure

  Strengths

  Except for a few quarters, Twilio's organic usage revenue has shown a strong correlation with AWS ex-AI, consistent with its use by cloud-native / web application developers.

  Weaknesses

  The correlation is affected by one-off quarterly disruptions, and the report maintains a Market-Perform rating.

  Comparison

  TWLO's read-across logic is weaker than DDOG's, and its target price of $126 is below the current price of $145.30.

  Risks

  Volatility in usage-based revenue, one-off quarterly disruptions, and slowing cloud-native application development.

• MDB / SNOW

  Read-across names in databases and cloud platform software

  Strengths

  Databases, platforms, and middleware are investment areas emphasized in the CIO survey, and AWS strength could indirectly support demand.

  Weaknesses

  This report mainly discusses the read-across relationship and does not provide rating and target-price details for these companies.

  Comparison

  The report mentions MDB and SNOW are covered by Mark Moerdler as cloud consumption-related database names.

  Risks

  Budget releases fall short of expectations, AI projects change IT priorities, or cloud optimization causes consumption volatility.

Key data

• Potential Q1'26 AWS ex-AI quarter-over-quarter growthmid-to-high 2% QoQThe report believes Q1 is usually weaker, but Q4'25 strength and sales incentives may have pulled some deals into Q1.
• Potential AWS ex-AI year-over-year growthapproximately 20%Based on Q1 revenue acceleration signals and core AWS estimates after separating AI revenue.
• Potential Q2'26 accelerationapproximately 100bpsQ1 web metrics indicate Q2 ex-AI revenue could still accelerate further.
• AWS AI services ARR$15B+Amazon reported AI ARR exceeded $15B by the end of 1Q26.
• Graviton + Trainium annualized revenue$20B+, or approximately $50B including Amazon internal usageThe report says the business grew triple digits year over year, clearly above the $10B+ level disclosed on the 4Q25 earnings call.
• OpenAI and Anthropic Trainium capacity7GWThe report says the two companies' new deals together lock in 7GW of future Trainium capacity.
• 2026 IT budget growth expectation3.3%The CIO survey shows the initial 2026 IT budget growth expectation is among the strongest non-pandemic levels and similar to the initial 2025 expectation.
• AMZN rating and target priceOutperform, $265Current price $249.91, as of 2026-04-21.
• DDOG rating and target priceOutperform, $180Current price $129.29, as of 2026-04-21.
• TWLO rating and target priceMarket-Perform, $126Current price $145.30, as of 2026-04-21.
• NET rating and target priceMarket-Perform, $146Current price $207.67, as of 2026-04-21.

Impact & implications

If AWS SSO strength continues, both AWS ex-AI growth and AI cloud revenue could support further improvement in Amazon fundamentals and provide positive demand signals for cloud-native consumption software companies such as Datadog, Cloudflare, and Twilio. However, the report also notes that H2 will face a higher comparison base, and the Iran war, macro/tariff disruptions, or budget pauses could weaken the trend.

Risks

• Iran war-related uncertainty could turn the later Q2 trend negative.
• Macro, tariff, and recession concerns could lead enterprises to pause IT spending or shut down recently launched projects.
• H2'26 will face the high year-over-year comparison base of the strong cloud project ramp in H2'25.
• The web metrics vendor changed its collection methodology in August 2024, creating methodology risk in historical bridge data and regression results.
• AWS one-time discounts, credits, sales incentives, or pricing changes could disrupt the stability of the relationship between SSO metrics and revenue.
• AI projects could again alter IT budget priorities, crowding out traditional cloud modernization or platform software spending.

What to watch

• Whether AWS SSO engagement after Q2'26 can sustain the strength seen in the third week of April.
• Whether AWS Q1'26 and Q2'26 ex-AI revenue validate the acceleration signal indicated by web metrics.
• Continued disclosures on AWS AI services ARR, Trainium orders, and Graviton/Trainium semiconductor revenue.
• Whether enterprises reallocate AI-driven efficiency savings to H2 cloud and platform software spending.
• Whether usage-based revenue at Datadog, Cloudflare, Twilio, MongoDB, and Snowflake is consistent with the AWS read-across trend.
• Whether macro factors, tariffs, DOGE-related policies, and geopolitical events again suppress IT projects.