The clouds made it rain

Welcome to Runtime! Today: The enterprise AI boom has re-energized the cloud computing market, but at quite a cost, a new supply-chain attack hits SAP developers, and the latest enterprise moves.

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Remember cloud repatriation?

It can be hard to remember that just a few years ago, cloud providers were going through a bit of a downturn (by their standards anyway), when growth declined due to a pullback in enterprise IT budgets amid war in Ukraine and the end of the zero interest-rate policy era. But thanks to enterprise AI, the Big Three cloud providers are surging, leaving them poised to expand their control over enterprise IT spending well into the next decade.

AWS, Microsoft, and Google Cloud all reported quarterly revenue and earnings numbers Wednesday that beat Wall Street's already-lofty expectations for their performance, and even the threat caused by another war in another place doesn't seem to be having any effect on their plans for the future. "We’ve never seen a technology grow as rapidly as AI," Amazon CEO Andy  Jassy said on its earnings call.

• AWS reported revenue of $37.6 billion, an increase of 28%, and "the last time we saw growth at this clip, AWS was roughly half the size," Jassy said on the earnings call.
• Microsoft's Azure division grew by 40%, and while Microsoft still refuses to provide an actual number for the revenue earned by the most important product in the company's arsenal for reasons that grow dumber with every quarter, Synergy Research estimated that Azure brought in $27 billion.
• And Google Cloud blew everyone out of the water with a 63% increase in revenue compared to last year to $20 billion, which now represents nearly one-fifth of Alphabet's overall revenue.
• "Our enterprise AI solutions have become our primary growth driver for Cloud for the first time," Google CEO Sundar Pichai said on the earnings call.

The Big Three don't plan to hold on to their winnings for very long; each company plans to increase the amount they're spending on capital expenditures over the rest of the year, above and beyond the incredible amounts they'd already planned. Data centers are getting harder and harder to build thanks to energy shortages and mounting opposition from local communities, but that's not deterring any plans.

• "The faster AWS grows, the more short-term capex we’ll spend,” Jassy said on Amazon's call after it revealed that it spent $43.2 billion during the first quarter, although that number includes investment in Amazon's sprawling retail operation, not just AWS.
• Microsoft now expects to spend $190 billion in cap ex for the calendar year, and CFO Amy Hood said a decent chunk of that increase is due to the rising cost of components.
• For its part, Google said it now expects to spend roughly $185 billion this year, $5 billion more than it promised to spend just a quarter ago.

The real question at this point is how much revenue growth can be attributed to real enterprise demand for cloud provider services, as opposed to demand from the frontier model companies for cloud servers to train their models using money given to them by the cloud providers. Real momentum is building behind AI agents, but it's a little too early to tell how that interest is turning into dollars.

• At Microsoft, "over 300 customers are on track to process over one trillion tokens on Foundry this year, accelerating 30% quarter-over-quarter," said CEO Satya Nadella, referring to activity on Microsoft's agent-building service.
• Pichai had an even better stat: "Over the past 12 months, 330 Google Cloud customers each processed over 1 trillion tokens," he said on the call.
• Jassy declined to get into a token-measuring contest, but said AWS's Bedrock AI service "saw 170% growth in customer spend quarter over quarter and processed more tokens in Q1 than all prior years combined."

The thing about booms is that they tend to go bust, and it's really starting to look like high-end enterprise AI is about to get a lot more expensive.

• But if enterprise AI demand has staying power, it looks like those businesses are planning to run AI in the cloud.

Package problems persist

Countless software developers around the world rely on publicly available packages of code that allow them to move much faster than they could if they had to re-write all that code every time they build a new release, but it's getting rough out there, On the heels of several package-related supply-chain attacks over the last year, a new threat has surfaced that targets developers working with SAP applications.

Several security companies on Wednesday detected the publication of malicious packages that appeared to be SAP-approved code but actually installed malware on the computers of any developers who downloaded and installed those packages, according to Dark Reading. "The campaign leverages a multi-stage payload to harvest developer and CI/CD secrets across GitHub, npm, and major cloud providers, and exfiltrates the data via attacker-controlled GitHub repositories," Google's Wiz said in a blog post.

"The targeted packages sit in normal SAP development workflows," according to Aikido Security, which "makes this campaign small in package count but potentially high impact." The stolen credentials are automatically published to GitHub with the label "A Mini Shai-Hulud has Appeared," suggesting that the attackers spend too much time in Discord but are also probably related to the wave of Shai-Hulud (it's a Dune reference) attacks last year.

Enterprise moves

Jeanclaude Toma is the new CEO of Apricorn, joining the quantum-resistant storage company after tech leadership roles at Apace Systems.

Jeremy Bolton is the new chief commercial officer at OXIO, joining the telecom services provider after more than 20 years at Verizon.

Rashmi Garde is the new chief legal officer at Veeam, joining the backup and recovery service provider after helping Informatica merge with Salesforce.

Tracy Roccasalva is the new chief marketing officer at Hyland, joining the content management company after marketing leadership roles at Informatica and VMware.

The Runtime roundup

Two committees in the U.S. House of Representatives sent letters to Cursor and Airbnb demanding to know more about their use of AI models developed in China, according to Semafor.

Atlassian beat Wall Street expectations and raised guidance for the full year, showing that at least some SaaS companies might still have legs in the AI era.

Thanks for reading — Runtime is off for the weekend, see you Tuesday!