Big Tech Surges on Strong AI-Driven Earnings

Key Moments

Major Tech Earnings Underscore AI and Cloud Momentum

Alphabet Inc., Amazon.com Inc., Meta Platforms Inc. and Microsoft Corporation all delivered stronger-than-expected quarterly results, underscoring how artificial intelligence and cloud computing are driving performance across the largest technology platforms.

AI and digital services are emerging as central engines of global economic activity, even as concerns build that overall growth could slow, partly due to higher energy costs linked to the Iran war.

According to the World Bank, the digital economy – spanning advertising, cloud computing and online retail – now represents around 15% of global GDP, or about $16 trillion (€14.7 trillion).

The latest first-quarter earnings from these four companies exceeded forecasts and provided investors with clearer insight into how AI-related spending and cloud adoption are progressing across the sector.

Alphabet’s profit climbed 81% as Google’s AI strategy boosted revenue and lifted its market capitalization toward $4.5tr (€4.14tr). Amazon benefited from accelerating demand for its cloud services. Meta topped expectations but unsettled some investors by raising its spending outlook, while Microsoft also came in ahead of estimates.

Together, the results highlight both the upside and the mounting costs of the intensifying race to dominate AI.

Alphabet: AI Investment Drives Profit Surge and Market Cap Expansion

Alphabet Inc. reported another robust quarter as Google’s pivot toward artificial intelligence continued to deliver results, contributing to a more than doubling of the company’s market value over the past year.

For the January-March period, Alphabet posted profit of $62.6 billion (€57.6bn), or $5.11 per share, an 81% increase from a year earlier. Revenue advanced 22% to $109.9bn (€101.1bn), with both metrics surpassing analyst expectations.

Digital advertising, led by Google’s dominant search engine, remained the primary growth driver. Advertising revenue rose 16% from the prior year, marking the fourth consecutive quarter of double-digit growth above 10%.

Google Cloud remained the company’s fastest-growing segment, underpinned by AI-related demand. Cloud revenue rose 63% to $20 billion (€18.4 billion), supported by contracts with corporate customers and government entities, including the US military.

The performance indicates that Alphabet’s heavy AI spending is generating returns, though investors continue to watch whether the company and its peers might be committing too much capital to a still-evolving technology.

Alphabet’s shares gained more than 7% in extended trading following the release, positioning the stock to set a fresh high in Thursday’s session. The company’s market capitalization stands at about $4.2tr (€3.86tr), up from $1.9tr (€1.75tr) a year earlier. If the current trajectory continues, it could move toward $4.5tr (€4.14tr), implying more than $250bn (€230bn) of additional shareholder value in a single day.

These gains stand in contrast to the immediate market reaction for some other large AI players. Microsoft and Meta Platforms both saw their shares decline in after-hours trading, with Meta down roughly 7% after presenting an investment strategy that drew investor scrutiny. Microsoft’s stock also slipped temporarily even as it exceeded forecasts.

Meta: Strong Top-Line Growth, Heavier Spending Plans

Meta Platforms delivered a first-quarter earnings beat, with solid expansion in both profit and revenue, while simultaneously increasing its planned investment levels.

The company reported profit of $26.8bn (€24.6bn), or $10.44 per share, up 61% from $16.64bn (€15.3bn) a year earlier. Revenue increased 33% to $56.31bn (€51.8bn).

“We had a milestone quarter with strong momentum across our apps and the release of our first model from Meta Superintelligence Labs,” CEO Mark Zuckerberg said. “We’re on track to deliver personal superintelligence to billions of people.”

Meta stated that 3.56 billion people used at least one of its applications daily in March, a slight decline from December. The company attributed part of that drop to internet disruptions in Iran and restrictions in Russia.

For the second quarter, Meta projects revenue between $58bn and $61bn (€53.4bn to €56.1bn), versus analyst expectations of $59.48bn (€54.7bn).

The company raised its capital expenditure outlook for the year to a range of $125bn to $145bn (€115bn to €133bn), up from a prior forecast of $115bn to $135bn. At the same time, Meta has said it is reducing its workforce by about 10%, or around 8,000 roles, even as it ramps up spending on AI infrastructure and talent.

Microsoft: Cloud and AI Fuel Earnings, Capex to Climb Sharply

Microsoft posted another quarter of better-than-expected results, supported by sustained demand for its cloud and AI offerings.

Net income rose 23% to $31.8 billion (€29.2 billion). Revenue increased 18% to $82.9 billion (€76.3 billion), with growth in Microsoft Cloud and Azure offsetting softness in hardware and gaming.

The company indicated that capital expenditures for the year will total $190bn (€163bn), representing a more than 60% increase from last year.

Microsoft told investors it anticipates continued expansion in the upcoming quarter, helped by robust demand for cloud and AI services, particularly across Azure and the broader Microsoft Cloud portfolio.