Cloud infrastructure cross-comparison: Azure and Google Cloud have superior risk-reward, CoreWeave is weakest

Overview

The report compares Amazon AWS, Microsoft Azure, Google Cloud, Oracle Cloud Infrastructure, and CoreWeave in terms of asset efficiency, margins, capital returns, contract structure, valuation, and financing risk. HSBC believes the three hyperscale cloud providers with general-purpose cloud businesses can achieve higher asset turnover and ROIC, while GPU-compute-focused cloud services are more commoditized and more capital-intensive. After considering valuation and risk, Azure and Google Cloud are the most attractive, while CoreWeave is the least attractive.

Core views

First, AWS, Azure, and Google Cloud are expected to significantly lead Oracle and CoreWeave in 2027 ROIC thanks to general-purpose cloud products, higher margins, and better asset utilization. Second, AWS's high returns partly come from more short-term contracts; although pricing is higher, it faces greater renewal risk if GPU rental prices fall or next-generation chips improve cost-performance. Third, Azure and Google Cloud have lower implied EV/EBIT valuations and strong balance sheets, offering the best risk-adjusted value. Fourth, Oracle has a large RPO and a low EV/RPO, but its growth realization cycle is long, financial leverage is high, and disclosure is limited. Fifth, CoreWeave has lower margins and ROIC, higher borrowing costs, and relies on customer prepayments and external financing to support capital expenditure.

Analysis framework

The report first uses HSBC forecasts for 2026 to 2028 equity, net debt, and share prices to estimate company enterprise value, then deducts non-cloud business valuation to separate the implied enterprise value of the cloud infrastructure business. It then conducts cross-company comparisons using three methods: EV/EBIT, EV/RPO, and EV/net fixed assets, while assessing risk-reward based on ROIC, asset turnover, contract duration, customer concentration, customer financing, net leverage, credit ratings, and free cash flow.

Methodology notes

• Relative valuationEV/EBIT

  Cloud business implied enterprise value divided by non-GAAP EBIT after stock-based compensation.

  This method compares earnings valuation across different cloud businesses. The report first deducts non-cloud business value from overall company enterprise value; the results show that Google Cloud and Azure have lower implied 2028 multiples, but the split results are sensitive to valuation assumptions for non-cloud businesses.

• Contract value valuationEV/RPO

  Cloud business implied enterprise value divided by remaining performance obligations.

  This method uses signed contracts to measure the market valuation assigned to order backlog. Oracle has the lowest multiple, but its RPO is longer-dated and financing risk is higher; higher multiples for hyperscale cloud providers reflect market confidence in margins and execution capabilities.

• Asset-based valuationEV/net fixed assets

  Cloud business implied enterprise value divided by net property, plant, and equipment.

  This method is suitable for capital-intensive cloud infrastructure, but some fixed assets at Amazon and Google also serve e-commerce or search businesses, so assigning all fixed assets to the cloud business may understate their multiples.

• Capital efficiencyROIC and WACC comparison

  Compare return on invested capital with weighted average cost of capital to determine whether capital expenditure can create value.

  The ROIC of AWS, Azure, and Google Cloud is well above WACC, supporting continued investment; CoreWeave's ROIC may be below its borrowing cost, so expansion is more dependent on customer financing or equity injections.

• Segment valuationSum-of-the-parts valuation

  Value non-cloud businesses and cloud infrastructure businesses separately to derive the market-implied value of the cloud business.

  The net present values used for Amazon and Google's non-cloud businesses are USD947bn and USD3,384bn, respectively; Microsoft non-Azure business valuation is USD2,099bn, and Oracle non-OCI business valuation is USD273bn.

Asset mapping & comparison

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

• Microsoft Azure / MSFT.OQ

  Risk-adjusted preferred pick

  Strengths

  Expected 2027 ROIC of 14.6%, fast earnings growth, implied 2028 EV/non-GAAP EBIT of only 14.1x, and a strong parent-company balance sheet.

  Weaknesses

  Implied 2026 EV/EBIT is still 29.7x, and cloud business RPO must be estimated from company-level disclosures.

  Comparison

  The 2028 earnings multiple is lower than AWS, and risk-reward is better than Oracle and CoreWeave.

  Risks

  Concentration among large AI customers, continuing increases in capital expenditure, and errors in segment data estimates.

• Google Cloud / GOOGL.N

  Risk-adjusted preferred pick

  Strengths

  Expected 2027 ROIC of 16.0%, implied 2028 EV/non-GAAP EBIT of 10.1x, the lowest in the sample; self-developed TPU and Gemini-related revenue may improve asset efficiency and margins.

  Weaknesses

  About 75% of Google's value comes from non-cloud businesses, making the cloud business implied valuation highly sensitive to assumptions about non-cloud business value.

  Comparison

  Valuation is below Azure and AWS, and its financial position is clearly better than Oracle and CoreWeave.

  Risks

  Valuation bias in non-cloud businesses, customer concentration, and AI infrastructure capital expenditure returns falling short of expectations.

• Amazon AWS / AMZN.OQ

  High return but higher contract risk

  Strengths

  Expected 2027 ROIC of 18.9%, the highest in the sample; leading asset turnover, margins, and general-purpose cloud product portfolio.

  Weaknesses

  RPO covers only about 2.5 years of next twelve months revenue, and EV/RPO is the highest at 4.47x.

  Comparison

  Capital returns are higher than Azure and Google Cloud, but 2028 EV/EBIT is higher than both, making risk-adjusted attractiveness slightly weaker.

  Risks

  Declines in short-term GPU rental prices, renewal failures, next-generation GPUs improving cost-performance, and customer concentration.

• Oracle Cloud Infrastructure / ORCL.OQ

  Cheap valuation but relatively high financial risk

  Strengths

  EV/RPO is only 0.45x, and implied 2028 EV/non-GAAP EBIT is about 14.0x; RPO is about 18.8x next twelve months revenue, supporting multi-year growth.

  Weaknesses

  ROIC is in the single digits, expected net debt/non-GAAP EBIT exceeds 3x, and cloud business disclosure is limited.

  Comparison

  Valuation is close to Azure and significantly below AWS and CoreWeave, but financial risk is higher than the three hyperscale cloud providers.

  Risks

  Delivery of long-dated orders, reliance on customer financing, leverage, interest costs, and concentration in major customers such as OpenAI.

• CoreWeave / CRWV.N

  Weakest risk-reward

  Strengths

  RPO coverage period is relatively long, and the order structure has shown some degree of customer diversification; EV/net fixed assets is only 3.4x.

  Weaknesses

  Implied 2028 EV/non-GAAP EBIT is as high as 27.0x, margins and ROIC are low, and expected net debt/non-GAAP EBIT exceeds 17x.

  Comparison

  EV/RPO is higher than Oracle, but financing risk is higher; capital returns significantly lag the three hyperscale cloud providers.

  Risks

  Non-investment-grade credit, high borrowing costs, reliance on customer prepayments, refinancing, capital expenditure needs, and commoditization of GPU cloud services.

Key data

• Expected 2027 ROICAWS 18.9%; Google Cloud 16.0%; Azure 14.6%Oracle Cloud Infrastructure and CoreWeave are expected to be only in the single digits, showing that general-purpose cloud businesses have better capital efficiency.
• Implied 2028 EV/non-GAAP EBITGoogle Cloud 10.1x; Oracle 14.0x; Azure 14.1x; AWS 18.2x; CoreWeave 27.0xAll are calculated after stock-based compensation; Google Cloud's result is highly dependent on non-cloud business valuation.
• EV/RPOOracle 0.45x; CoreWeave 0.92x; Google Cloud 2.17x; Azure 2.87x; AWS 4.47xA low multiple does not necessarily represent better risk-reward; margins, contract duration, and financing capacity must also be considered.
• RPO coverage of next twelve months revenueAWS 2.5 years; Azure and Google Cloud about 3.4 years; CoreWeave 6.4 years; Oracle 18.8 yearsAWS is more dependent on short-term contracts; Oracle's large order backlog supports multi-year growth, but the realization period is longer.
• EV/net fixed assetsAzure 6.1x; AWS 5.6x; CoreWeave 3.4xThe high multiples of Azure and AWS can be explained by higher margins and asset turnover; Amazon and Google's calculations have asset allocation bias.
• Azure earnings growthEBIT after stock-based compensation is expected to grow at a 39.3% CAGR from 2025 to 2030Higher than AWS's 31.1%, causing Azure's EV/EBIT multiple to be expected to fall below AWS by 2028.
• Customer concentrationOpenAI and Anthropic together account for about 50% of the relevant cloud providers' RPOApplies to Oracle, Amazon, Google, and Microsoft; both core customers are private companies with limited credit and liquidity transparency.
• CoreWeave dependence on customer financingCustomer prepayments account for about 18.1% of total fixed assetsAlthough this has fallen from more than 40% in the first quarter of 2024, its non-investment-grade credit rating and high financing costs mean the dependence may persist.
• Oracle customer financingInterest-bearing customer financing of USD4,592m and interest-free customer prepayments of USD15,395mAs of the second quarter of 2026, the two together accounted for 16.3% of total fixed assets.
• Expected net debt/non-GAAP EBITOracle above 3x; CoreWeave above 17xThese are expected levels for 2026 to 2027; the two companies have the highest financial leverage in the covered sample.

Impact & implications

For investors, cloud infrastructure should not be valued solely based on order size or asset size; margins, asset turnover, contract duration, and financing structure should also be examined. Azure and Google Cloud combine relatively high capital returns, lower implied earnings multiples, and strong balance sheets, offering better risk-adjusted returns. AWS still has the highest ROIC, but its higher share of short-term contracts makes it more sensitive when GPU rental prices decline. Oracle's order backlog supports long-term growth and its valuation is cheap, but high leverage and reliance on customer financing limit rerating potential. Although CoreWeave's EV/net fixed assets is low, low margins, high financing costs, and dependence on capital expenditure mean the discount has fundamental reasons.

Risks

• OpenAI and Anthropic together account for about 50% of the RPO of multiple cloud providers, indicating high customer concentration, while the financial transparency of private customers is limited.
• GPU rental prices may fall rapidly due to declining compute demand or next-generation chips significantly improving cost-performance, with AWS especially sensitive given its larger short-term contract exposure.
• AI infrastructure requires sustained high capital expenditure; if ROIC is below financing costs, expansion will erode shareholder value.
• Oracle and CoreWeave have higher leverage and financing costs, which may constrain capital expenditure, free cash flow, and valuation rerating.
• CoreWeave and Oracle's reliance on customer prepayments or customer financing increases risks of project cancellation, contract renegotiation, and customer credit risk.
• Valuations of Google Cloud, Azure, and Oracle cloud businesses rely on segment splits and non-cloud business valuation assumptions, so results may fluctuate significantly as assumptions change.
• EV/RPO does not directly reflect contract duration, margins, or execution difficulty; low multiples may correspond to lower quality or longer-dated revenue.
• EV/net fixed assets comparisons contain asset attribution errors, especially as some fixed assets at Amazon and Google also support non-cloud businesses.

What to watch

• Changes in OpenAI and Anthropic's financing capacity, liquidity, and cloud computing purchase commitments.
• AWS short-term contract renewal rates, rental prices, and RPO duration structure.
• Whether actual ROIC for Azure, AWS, and Google Cloud can remain above WACC.
• Contribution of Google's self-developed TPU and Gemini commercialization to asset turnover and cloud margins.
• The pace at which Oracle's large RPO converts into revenue and cash flow.
• Net leverage, bond yields, and refinancing conditions for Oracle and CoreWeave.
• CoreWeave customer prepayments as a share of fixed assets and the need for new equity financing.
• Recovery in free cash flow at major technology companies after 2028.
• The degree of alignment between cloud providers' capital expenditure growth and AI compute utilization.