Hyper scalers have a decent margin from a small number of their services and a much more normal if not a loss from many others. Additionally a massive part of their profit is support services and contracts.

They also benefit from the fact that developers do what is convenient for themselves and not what is necessarily computationally efficient (i.e. not pay attention to cross AZ egress/ingress, run an apache spark job when it could be done all within a normal database, build their entire product on irreplaceable/unswappable cloud provider specific databases and storage solutions).

AI will also experience a significant margin collapse, it's just not clear who will eat the brunt of it yet, the AI companies themselves or companies like Nvidia as more chip manufacturers/designers come into the arena and can meaningfully compete.