I'm pretty sure AWS/Azure/GCP don’t assign separate boxes to every customer, and somehow they’re fine.
As usual, cost is the biggest hindrance to security.
Still, I think that if your company is handling user data it's worth seriously considering dedicated instances for any service that encounters plaintext user information.
Leaks between different EC2 instances would be far more serious, but I suppose that wouldn't happen unless two tenants / EC2 instances shared SMT cores, or the contents of the microarchitectural register file was persisted across VM context switches in an exploitable manner.