Alphabet, Amazon, Meta and Microsoft all beat earnings expectations, as they reported on Wednesday, but Alphabet stood out, with its shares jumping 7% in extended trading on strong cloud growth.
Four of the biggest tech companies in the world, Alphabet Inc., Amazon.com Inc., Meta Platforms Inc. and Microsoft Corporation, all reported strong quarterly results on Wednesday, driven by rapid growth in artificial intelligence and cloud computing.
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Growth in AI and digital services is becoming a key driver of the world economy, amid growing concerns that broader growth could slow, partly due to rising energy costs linked to the Iran war.
The digital economy — including advertising, cloud computing and online retail — now accounts for about 15% of global GDP, or roughly $16 trillion (€14.7 trillion), according to the World Bank.
The four companies’ first-quarter earnings all beat expectations, giving investors a clearer picture of AI spending and cloud growth across the industry.
Alphabet’s profit rose 81% as Google’s AI investments lifted revenue and pushed its market value towards $4.5tr(€4.14tr). Amazon saw strong demand for its cloud services, while Meta beat forecasts but raised spending plans, unsettling investors. Microsoft also reported better-than-expected results.
Together, the figures highlight both the benefits and rising costs of the tech industry’s race to lead in AI.
Alphabet’s first-quarter profit soars as Google’s big AI bets push stock to new highs
Google’s shift into artificial intelligence is continuing to pay off for its parent company, Alphabet Inc., which reported another quarter of strong growth that has helped more than double its already high market value over the past year.
Alphabet earned $62.6 billion (€57.6bn), or $5.11 per share, in the January–March period, an 81% rise from a year earlier. Revenue climbed 22% to $109.9bn (€101.1bn). Both figures were well ahead of analysts’ forecasts.
As usual, digital advertising driven by Google’s dominant search engine led the growth. Ad revenue rose 16% from a year earlier, marking the fourth straight quarter of growth above 10%.
Google’s fastest-growing division remains its Cloud business, boosted by demand linked to AI. Revenue there rose 63% to $20 billion (€18.4 billion), helped by deals with corporate customers and government agencies, including the US military.
The growth suggests Alphabet’s heavy spending on AI is paying off so far, although investors remain concerned that the company and its peers may be spending too much on an emerging technology.
Alphabet’s share price rose more than 7% in extended trading after the results, putting it on course to reach a new high in Thursday’s session. The company’s market value is about $4.2tr (€3.86tr), up from $1.9tr (€1.75tr) a year ago. If the trend continues, it could approach $4.5tr (€4.14tr), adding more than $250bn (€230bn) in shareholder value in a single day.
These gains are not being matched by some other big AI investors. Microsoft and Meta Platforms both saw their shares fall in extended trading, with Meta down about 7% after outlining an investment strategy that investors questioned. Microsoft’s shares also dipped temporarily, despite beating forecasts.
Meta beats revenue forecasts, raises spending outlook
Meta Platforms reported first-quarter results that beat expectations, with strong growth in earnings and revenue, but also increased its planned spending.
The company earned $26.8bn (€24.6bn), or $10.44 per share, up 61% from $16.64bn(€15.3bn) a year earlier. Revenue rose 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 said 3.56 billion people used at least one of its apps daily in March, slightly down from December, partly due to internet disruptions in Iran and restrictions in Russia.
It expects second-quarter revenue of $58bn to $61bn (€53.4bn to €56.1bn), compared with analysts’ estimate of $59.48bn (€54.7bn).
The company raised its forecast for capital spending this year to $125bn to $145bn (€115bn to €133bn), up from $115bn to $135bn previously announced.
The company has said it is cutting about 10% of its workforce, around 8,000 jobs, while increasing spending on AI infrastructure and talent.
Microsoft reported a steady rise in income
Microsoft also reported better-than-expected quarterly results, with net income rising 23% to $31.8 billion (€29.2 billion), driven by continued demand for its cloud and AI services.
Revenue grew 18% to $82.9 billion (€76.3 billion), as growth in Microsoft Cloud and Azure offset weakness in hardware and gaming.
The company told investors that capital expenditures for the year will reach $190bn (€163bn), a more than 60% jump from last year's spending.
Microsoft expects continued growth in the next quarter, supported by strong demand for cloud and AI services, particularly across its Azure platform and broader Microsoft Cloud business.
Amazon's higher first-quarter profits and sales were driven by cloud demand
Amazon reported strong growth in profits and sales in its first quarter, helped by rising demand for its cloud computing services.
Sales in its cloud unit rose 28% in the January–March period, the fastest growth in 15 quarters. This follows growth of 24% in the previous quarter and 20% before that.
The Seattle-based company also gave a strong outlook for the current quarter, beating analysts’ expectations. Shares initially fell nearly 2% in after-hours trading before rising about 3%.
Investors are watching whether Amazon’s $200bn (€184bn) investment in AI, robotics, semiconductors and satellites is starting to pay off. The planned spending is up 60% from last year’s $128bn (€118bn), and had earlier unsettled investors.
Chief executive Andy Jassy has defended the spending, saying it is aimed at long-term returns.
The latest results suggest demand for Amazon’s services remains strong.
Recent deals with OpenAI, Anthropic and Meta have also strengthened Amazon’s position.
Amazon reported earnings of $30.3bn (€27.9bn), or $2.78 per share, compared with $17.1bn (€15.7bn), a year earlier.
Net sales rose 17% to $181.5bn (€167bn), above expectations.
Amazon Web Services generated $37.58bn (€34.6bn) in revenue, also beating forecasts.
For the current quarter, Amazon expects sales of $194bn to $199bn (€178bn to €183bn), slightly above forecasts.
