Big Tech results: Alphabet soars as Meta meta sinks on spending plans
The four largest AI players reported quarterly earnings simultaneously for the first time on Wednesday, delivering a broadly positive set of results that nonetheless triggered a sharp divergence in after-hours share price moves.
Alphabet led the pack, with Google’s parent company posting revenue of $109.9bn (£81.6bn) a 22 per cent rise on the same period last year, driven by huge growth in its cloud division.
Google Cloud revenues climbed 63 per cent to $20bn, comfortably clearing analyst forecasts, as demand for AI services continued to accelerate.
Shares jumped more than six per cent after the closing bell.
Amazon and Microsoft also impressed. AWS, Amazon’s cloud arm clocked its strongest quarterly growth in nearly four years, up 28 per cent to $37.6bn, helping the company to overall revenues of $181.5bn.
Microsoft, meanwhile, reported $82.9bn in sales with its Azure platform growing 40 per cent and its AI products now generating an annualised $37bn in revenue – more than double the figure from a year ago.
“Biggest earnings day ever. To the best of my knowledge, these four largest companies have never put it on the same day, so we’re going to learn a lot in a very short period of time,” said Gil Luria, head of technology research at DA Davidson, ahead of the results.
The night delivered on that billing, though not uniformly.
Meta spending bill drags share price
Meta’s decline has deepened into the European session, with shares now off around 10 per cent from Wednesday’s close.
Analysts at Hargreaves Lansdown described the market reaction as an overreaction given unchanged full-year expense guidance, but investors appear unwilling to extend further patience to a company with no cloud revenue to show against its AI spending. The stock had risen around 24% over the prior month, leaving room for the reversal to run.
The Facebook and Instagram parent grew revenues by 33 per cent to $56.3bn, ahead of what markets had expected, yet its shares tumbled more than five per cent in after-hours trading following the report.
The trigger was a newly announced increase to its investment plans. Meta now expects to spend between $125bn and $145bn on capital projects this year, around $10bn more than it had previously indicated, as chief executive Mark Zuckerberg pushes ahead with ambitions to build what he described as “personal superintelligence for billions of people.”
With no cloud business of its own to generate AI-related revenues from third parties, investors have grown impatient waiting for those bets to pay off.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “You can’t tell from the market reaction, but Meta delivered another very strong quarter, with advertising momentum clearly accelerating”.
He added that the spending increase was “modest relative to Meta’s existing investment plans” and came against a backdrop of strong revenue growth and healthy margins.
The reaction stood in contrast to Alphabet, which also raised its spending outlook to as much as $190bn for the full year, without triggering the same alarm.
The difference was that Google Cloud’s profitability is already moving sharply in the right direction.
Collectively, the four companies are on course to spend around $650bn building out AI data centres and infrastructure in 2026 – a figure that has drawn intense scrutiny over whether the returns will justify the outlay.
Wednesday’s reports offered evidence they are starting to, at least for those with cloud businesses already generating AI revenue. For Meta, the jury remains out.