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Just curious if there is any downside that many nodes are being hosted on cloud providers?

For example Infura, which supports many nodes and provides a large portion of connections to Ethereum nodes, is all hosted on AWS.

AWS has been proven to be secure and reliable, but are there any downsides in the long-run for the health of the network?

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The same concerns as with any centralization: single point of failure and (indirect) control over the network.

If AWS was to go down one day all the nodes would go with it. Even if Amazon wouldn't have direct access to the nodes it would have indirect access to them - through for example traffic control or VM control (or on whatever the nodes are running on). So they could for example block traffic or take down the nodes unless something happens.

A cloud provider is still just a (glorified) centralized service provider.

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