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Major Tech Firms Report Mixed Q1 Results; Collective AI Spending Projected at $650 Billion

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Big Tech Earnings: Cloud Growth Soars, but AI Spending Spooks Investors

In a rare alignment, Amazon, Alphabet, Microsoft, and Meta all reported first-quarter results on the same day. While every company beat revenue estimates—fueled by booming cloud divisions—only Alphabet saw its stock rise in after-hours trading.

The Investor Paradox

Despite universally strong financial results, the market reacted with skepticism. Three of the four tech giants saw their stock prices fall in after-hours trading. Analysts pinned the decline on investor anxiety over massive planned capital expenditures for artificial intelligence (AI) infrastructure.

Company Financial Results

Amazon

  • Net Sales: $181.5 billion (17% YoY increase)
  • Earnings Per Share (EPS): $2.78 (vs. analyst estimates of $1.62–$1.64)
  • AWS Performance: Revenue grew 28% to $37.6 billion, beating the $36.6 billion estimate.
  • Context: AWS contributes 15%–20% of total sales but over 60% of operating profit.
  • Guidance: Second-quarter sales projected between $194 billion and $199 billion.
  • Market Reaction: Shares fell ~1.7% in after-hours trading and over 9% on Friday.

Alphabet (Google)

  • Revenue: $109.9 billion (above the expected $107.2 billion)
  • EPS: $5.11 (excluding a one-time item); $2.62 (adjusted)
  • Google Cloud: Revenue surged 63% YoY to $20 billion, exceeding estimates by nearly $2 billion.
  • Market Reaction: Stock rose approximately 8% in after-hours trading, making it the sole gainer.

Microsoft

  • Revenue: $82.89 billion (18% YoY increase, fiscal Q3)
  • EPS: $4.27 (beating the $4.06 estimate)
  • Azure Growth: Cloud revenue grew nearly 40% YoY.
  • AI Business: Runs at a $37 billion annualized revenue rate—up 123% YoY.
  • Market Reaction: Stock declined ~2.5% to 5% in after-hours trading.

Meta Platforms

  • Revenue: $56.3 billion (above the $55.45 billion consensus)
  • EPS: $10.44 (includes an $8 billion one-time tax benefit); Adjusted EPS was $7.31.
  • Market Reaction: Stock fell over 5% to 9% in after-hours trading.

AI Capital Expenditure: The Market's Core Concern

The four companies collectively projected approximately $650 billion in capital expenditures by 2026 for AI infrastructure. Current annual budgets may approach or exceed their combined spending from the previous three years.

  • Amazon: Plans to invest ~$200 billion by 2026 (up from $144.67 billion). Q1 CapEx was $44.2 billion—a 76% YoY increase. CEO Andy Jassy noted that much of 2026 spending will be monetized by 2027–2028.
  • Meta: Raised its full-year 2026 CapEx guidance to $125 billion–$145 billion, citing higher component costs and new data center capacity for AI.
  • Alphabet: Forecast CapEx of $175 billion to $185 billion for the year.
  • Microsoft: Reported continued heavy investment in AI infrastructure without a specific new figure.

Industry Agreements & Competitive Dynamics

Several major deals and chip developments were announced alongside earnings:

  • Snowflake-AWS Deal: A new $6 billion, five-year agreement with AWS, including expanded access to AWS's homegrown Graviton (ARM-based) CPU chip. Snowflake has sold $7 billion worth of services via AWS Marketplace since 2012.
  • Custom Chips: Amazon CEO Andy Jassy stated that their own AI chips offer better price-performance than Nvidia's, though AWS continues to use Nvidia chips. Google has been developing AI chips for years. Microsoft launched its Maia AI chip in January. Nvidia CEO Jensen Huang claimed Nvidia's new AI-specific CPU (Vera) represents a $200 billion market.
  • Meta-AWS Deal: AWS agreed to provide millions of Graviton chips to Meta for AI compute. Meta had previously signed a $10 billion deal with Google Cloud.

Broader Market Reaction

After-hours trading saw declines for Amazon, Microsoft, and Meta. Alphabet was the only company to gain, supported by its strong cloud results.

In the following week, a broader sell-off reduced the market capitalization of major tech firms (Amazon, Microsoft, Nvidia, Oracle, Meta, and Alphabet) by a total of $1.35 trillion, according to FactSet. In contrast, the Dow Jones Industrial Average rose over 700 points, and the Nasdaq Composite rose marginally.

Workforce Reductions

Over 92,000 tech employees have been laid off globally in 2026, according to Layoffs.fyi.

  • Meta: Announced layoffs of ~10% of staff (about 8,000 employees).
  • Microsoft: Offered voluntary retirement to approximately 125,000 workers.
  • Amazon: Reduced its corporate workforce by nearly 10% (~30,000 workers) in the five months prior to the report.