Post Content
Google, Meta, Microsoft, and Amazon, four of the biggest tech companies, together reported quarterly earnings on Wednesday, April 29, with Apple following on Thursday, April 30, and reporting its second quarter numbers.
The results showed that surging demand for AI computing capacity is lifting cloud revenue growth across the industry. However, much of that demand for compute seems to be coming from some of the biggest AI startups such as Anthropic and OpenAI. The use of AI continues to boost the ad businesses of tech giants such as Meta and Google.
However, perhaps the most important takeaway is that investment required to deliver computing capacity continues to increase, with so-called hyperscalers now planning to spend as much as $725 billion this year – up from the combined $600 billion on capex reported in the previous quarter – much of which is to be used to expand AI-related data centre capacity, buy chips, and cover other related costs.
Both Meta and Google have revised their hefty capex projections for this year by a few billion dollars, with Meta now estimating as much as $145 billion capex while Google projects up to $190 billion in capex spend. Taken together, the simultaneous earnings results from the major technology companies are an indicator of the current state of play in the AI race.
This is especially true for the three big cloud firms – Amazon Web Services (AWS), Microsoft Azure, and Google Cloud – which are renting out their servers for use by OpenAI and Anthropic, along with a growing number of other businesses. Investors are also looking for clues on broader trends, including how Microsoft’s software business will perform in an increasingly AI-dominated market.
Here’s a look at the key takeaways emerging from this week’s earnings reports.
Alphabet
In its earnings results for Q1FY2026, Google parent Alphabet reported 20 per cent growth in revenue from last year, driven by its surging cloud business, which houses most of its enterprise AI products and services.
Story continues below this ad
Google Cloud Platform saw a 63 per cent increase to $20.03 billion in quarterly revenue from the year-ago period. Its cloud business backlog also doubled during the quarter to $460 billion, signalling strong future demand and growth potential. Its search advertising growth also accelerated to 19 per cent.
“Our enterprise AI solutions have become our primary growth driver for cloud for the first time in Q1,” CEO Sundar Pichai told analysts on the earnings call. Gemini Enterprise saw a 40 per cent increase in paid monthly active users from the previous quarter, according to the CEO.
Some of Google Cloud’s potential growth could be attributed to its custom tensor processing units (TPU) chips, which Google is no longer using only for its own data centres but also selling them to other companies since last year. “We are compute constrained in the near term. Our cloud revenue would have been higher if we were able to meet the demand,” Pichai said.
Also Read | Google unveils 8th gen TPU computing chips, Gemini enterprise AI agent platform at Next 2026
Alphabet reported $35.7 billion in capex during the quarter, including on real estate, servers, data centres, and other infrastructure. The company also updated its 2026 capex guidance range to $180 billion-$190 billion, up from its previous estimate of $175 billion-$185 billion. Google’s 2027 capex is also expected to increase significantly, as per chief financial officer Anat Ashkenazi. Shares of Google rose 7 per cent in after-hours trading.
Story continues below this ad
Amazon
Amazon’s revenue from its AWS cloud segment saw an increase of 28 per cent year-over-year (YoY) to $37.59 billion, marking its fastest growth in more than three years. The tech giant previously announced a host of new AI-focused deals with Meta, Anthropic, and most recently, OpenAI. Amazon’s massive online shopping business also showed strong 12 per cent growth in the first quarter to $64.3 billion.
In terms of AI spending, Amazon did not report any change in its earlier capex projection of $200 billion by 2026. However, CEO Andy Jassy highlighted the need to build out even more data centres and infrastructure to meet surging demand. “We’re in the middle of some of the biggest inflections of our lifetime, we’re well positioned to lead, and I’m very optimistic about what’s ahead for our customers and Amazon,” Jassy said in a statement.
Similar to Google, Amazon also believes that its homegrown Trainium chip business will be a key beneficiary of the AI boom. “It’s no secret that the AI labs are spending an incredible amount of money on compute,” Jassy said, adding that there is also a fair bit of regular business demand for AI.
Also Read | Why Amazon is buying Globalstar, and what it means for satellite-to-phone connectivity
The company’s nascent satellite internet business, Leo, is also pushing its capex spending higher as it needs to make enough satellites and book more rocket launches to set up its 7,700 satellite-constellation. Currently, Amazon Leo has about 270 satellites in low earth orbit and is expected to start offering commercial services from the third quarter of 2026.
Story continues below this ad
At the start of the first quarter, Amazon announced it would lay off 16,000 corporate employees, after cutting 14,000 staffers in October 2025. Its current headcount is 1.57 million employees globally. Shares of Amazon were up by 4 per cent in extended trading.
Apple
Apple on Thursday reported a stellar March quarter with 17 per cent higher revenue, driven by over 22 per cent growth in iPhone revenues. This means that far more consumers are upgrading their old iPhones than has been the case for a while.
Apple executives further said they expect sales growth of 14 to 17 per cent in the current fiscal third quarter, driven by its flagship iPhone 17 and the newly launched MacBook Neo. However, the iPhone-maker also warned of continuing chip supply constraints amid the global rise of memory prices.
This is also Apple’s first quarterly earnings report following the announcement of a major leadership change, with Tim Cook stepping down as CEO and handing over the reins to hardware executive John Ternus from September 1, 2026, onwards.
Story continues below this ad
In an earnings call on Thursday, Ternus described Cook as “one of the greatest business leaders of all time” while the outgoing CEO said, “There is no one on this planet I trust more to lead Apple into the future than John Ternus.” Cook also pointed out that Apple had increased spending on research and development by 34 per cent in the quarter. Since Apple’s R&D expense has generally been around 8 per cent in the past few years, the increase suggests that AI is poised to usher in a new generation of devices and Apple clearly does not want to be left behind.
Also Read | Ternus’ major test as Apple CEO: bringing product-first thinking back to the company
Notably, Apple revealed that it is moving away from its long-standing cash management strategy of aiming to be net cash neutral, as per a report by Bloomberg. This suggests that Apple wants to stockpile more cash in order to be prepared for skyrocketing memory chip prices. Having more cash at hand could also help Apple in the AI race by allowing it to buy assets that might come up for sale at a time when other big tech companies are running down their cash reserves. Apple shares were up nearly 4 per cent in after-hours trading.
Meta
Meta reported a 33 per cent increase in revenue to $56.31 billion, marking the fastest quarter for growth since 2021. It underscores Meta CEO Mark Zuckerberg’s focus on AI investments, which has reportedly strengthened the tech giant’s core ads business but is yet to produce new revenue streams.
Additionally, Meta’s platforms saw a quarter-over-quarter drop in user growth due to “internet disruptions in Iran.” Its daily active people (DAP) of 3.56 billion marks a 4 per cent increase from the year-ago period but a more than 5 per cent drop from the fourth quarter DAP count.
Story continues below this ad
Meta also reported lower-than-expected capex at $19.84 billion, below the $27.57 billion average estimate. However, the social media giant raised its capex projection for 2026, from a prior range of $115 billion-$135 billion to $125 billion-$145 billion. This has reportedly sparked concerns among investors who are worried that the company’s investments in AI will not pay off as it does not have a cloud business model like Google, Amazon, and Microsoft.
In a call with analysts on Wednesday, Zuckerberg said that he has confidence in his decision to further boost AI spending. “We had a milestone quarter with strong momentum across our apps and the release of our first model from Meta Superintelligence Labs. We’re on track to deliver personal superintelligence to billions of people,” Zuckerberg said in a statement.
In April this year, Meta debuted its first proprietary foundational AI model called Muse Spark, which is reportedly being used to boost its ad business. Furthermore, the company has announced billion-dollar deals with Nvidia, AMD, and Broadcom for chips and other hardware in 2026. It is also building several massive data centres to power its AI efforts.
However, Meta will have to convince investors with a clear strategy on how it plans to make a return on these investments. In the meantime, it is looking to offset its AI spending by reducing the company’s overall workforce. “If we’re investing more in one area to serve our community, then that means we have less capital to allocate to the other. So that means we do need to take down the size of the company somewhat,” Zuckerberg was quoted as saying by Reuters.
Story continues below this ad
Also Read | Meta shares fell about 7 per cent in extended trading on Wednesday.
Last week, Meta announced it is laying off 8,000 employees, following job cuts of about 1,000 people from its Reality Labs unit earlier this year. Its total headcount is 77,986 as of March 31, 2026. “We don’t really know what the optimal size of the company will be in the future,” Susan Li, Meta’s CFO, said on an earnings call. Meta shares fell about 7 per cent in extended trading on Wednesday.
Microsoft
Microsoft’s revenue grew to $82.89 billion, an 18 per cent YoY increase with revenue from the company’s Azure business, GitHub, server products, and other cloud services posting a 40 per cent revenue growth ($34.68 billion).
While this suggests a strong growth rate of Microsoft’s cloud business in normal times, it lags behind the faster gains of Google Cloud and AWS, both of which are cloud providers for Anthropic and likely benefiting from the rising demand for Claude AI services. However, Microsoft also inked a deal with Anthropic last year and could report just as strong growth in the future as that partnership ramps up.
Notably, the report showed that more people are heavily using Microsoft’s AI-powered applications, dragging down profit margins of its cloud unit by 5 percentage points to 56 per cent in the first quarter compared to the year-ago period. In response, Microsoft has moved to set more aggressive pricing for customers renting servers equipped with Nvidia chips, which could boost Azure margins as demand has far exceeded supply. On Monday, April 27, Microsoft said it will charge GitHub Copilot customers additional fees based on how much they use it.
Story continues below this ad
It could follow the same playbook for its other AI products as well, such as 365 Copilot, Microsoft’s flagship AI tool that automates tasks in Outlook, Teams, and other Office apps. Currently, Microsoft charges a $30 per month flat fee for enterprise users of 365 Copilot. Paid users of 365 Copilot grew by 33 per cent quarter-over-quarter to 20 million, which is still a small segment of the 400 million users of its flagship Office 365 suite.
“Any per-user business of ours, whether it’s productivity or coding or security, will become a per-user and usage business. That’s obviously already happening with [GitHub Copilot] coding with some of the business model changes we made this quarter…but it also speaks to the intensity of usage,” Nadella said in an earnings call.
Also Read | OpenAI loosens Microsoft ties, opens door to Amazon and Google Cloud
In terms of AI spending, the Windows-maker told investors that its capex for 2026 will reach $190 billion, up by 61 per cent from 2025, due to the costs of memory chips, which has soared amid a global supply crunch driven by AI demand.
Amy Hood, Microsoft’s CFO, further said in an earnings call that she anticipates a $25 billion impact from higher component prices. During its third fiscal quarter, Microsoft reported $31.9 billion in capex spend and finance leases, coming in slightly below analyst estimates of $34.9 billion. Shares of Microsoft were down 4.5 per cent on Thursday.
