Barclay report reveals cloud giants capture majority of AI model revenue

A new report by Barclays reveals that for every $100 in revenue generated by AI model companies, between $35 and $40 flows to the three major cloud providers: Amazon AWS, Microsoft Azure, and Google GCP. This represents a significant portion of the profit, with cloud providers earning $10 to $20 in operating profit, translating to a 35% to 45% operating margin. The report, released on August 28, 2026, highlights the shift in value capture within the AI industry. Barclay analyst Ross Sandler notes that the rise in AI lab profitability, from around 10% in 2025 to 50-65% in 2026, is driven by enterprise clients and agentic workflows. The report also compares two hypothetical AI labs, showing a 17-point gap in adjusted gross margins due to differences in revenue recognition methods. Laboratory A, with 70% API revenue, has a 55% margin, while Laboratory B, with 80% subscription revenue, has a 38% margin. The report further outlines the financial dynamics between AI labs and cloud providers, emphasizing the impact of accounting practices and revenue-sharing mechanisms on profitability and comparability. It predicts a shift in the industry from training-driven to inference-driven models, with cloud providers' share of AI lab revenue expected to decline from 153% in 2024 to 73% by 2028.