Big Tech Revenues Surpass Targets as AI Drives Cloud Income Surge, Total Investment Budget Nears $700 Billion

Several major tech companies including Meta, Amazon, Google, and Microsoft have reported their latest quarterly earnings, with all four exceeding investor expectations. Most of the revenue growth came from their cloud and AI businesses, causing shares of AMZN, GOOG, and MSFT to rise immediately. Only META shares fell more than 7%, due to a decline in social media user numbers.

All four companies also announced a unified plan to move forward aggressively by increasing their capital expenditures (CapEx), particularly in AI, for this fiscal year, totaling more than $725 billion.

Meta's Q1 2026 performance

• Total revenue stood at $56.31 billion.This exceeded the expected $55.45 billion, marking a 33% increase from the previous year, driven by increased AI investment which, while not yet clearly profitable, has strengthened the advertising business.
• Net profit in the first quarter rose to $26.8 billion.Or $10.44 per share, up from $16.6 billion or $6.43 per share the prior year. This profit increase included a $8.03 billion tax benefit related to adjustments in tax law and spending under the Trump administration.
• :However,META shares dropped 7% after the earnings release. The company attributed this to the war in Iran causing social media usage restrictions, particularly a significant decline in WhatsApp users in Russia.
• Additionally, Meta stated thatit plans a capital expenditure budget for this fiscal year between $125 billion and $145 billion.This is an increase from the prior target of $115 billion to $135 billion, while the latest quarter's CapEx was $19.84 billion.
• For the next quarter, Meta's revenue forecast aligns with investor expectations, targeting between $58 billion and $61 billion, compared to analysts' estimate of $59.5 billion.

Amazon's Q1 2026 performance

• Amazon's total revenue was $181.52 billion.This exceeded analysts' forecast of $177.3 billion, with cloud business growth of 28% year-over-year.
• Key revenue sources includedAmazon Web Services generating $37.59 billion,surpassing the expected $36.64 billion, andthe advertising business earning $17.24 billion,higher than the expected $16.87 billion.
• Revenue from online retail, still Amazon's largest source, grew 12% in the quarter to $64.3 billion, above the forecast of $62.7 billion.
• Amazon's PPE expenses for this quarter totaled $44.2 billion, exceeding Wall Street's forecast of $43.6 billion. Meanwhile, the company's free cash flow over the past 12 months dropped 95% due to AI investments.
• AMZN shares rose about 2% after market close.Following the earnings announcement, the company reaffirmed plans to increase capital expenditures this fiscal year, especially in AI, which is expected to surpass $200 billion.This investment level is anticipated to exceed $200 billion this year.

Alphabet's Q1 2026 performance

• Google's total revenue was $109.9 billion.This was above LSEG analysts' forecast of $107.2 billion, a 20% increase from last year, mainly driven by cloud business growth such asGoogle Cloud generating $20.02 billion,exceeding StreetAccount's estimate of $18.05 billion and growing 63% year-over-year.
• YouTube advertising revenue was $9.88 billion,slightly below the $9.99 billion forecast, whiletraffic-related revenue reached $15.22 billion,also below the expected $15.3 billion. Meanwhile,Google's overall advertising revenue was $77.25 billion,up 15.5% from the same period last year.
• Alphabet's net profit for Q1 2026 was $62.57 billion,or $5.11 per share, an 81% increase from $34.54 billion or $2.81 per share the previous year.
• Notably, Gemini Enterprise user numbers grew 40% from the previous quarter. The Search business remained strong, with AI enhancements boosting usage and setting a record high for query volume, driving 19% revenue growth.
• Alphabet invested $35.7 billion in CapEx this quarter, focusing on AI infrastructure development.The total investment target for 2026 has been raised to between $180 billion and $190 billion.(Previously $175 billion to $185 billion.)

Microsoft's Q3 2026 performance

• Microsoft's total revenue for the quarter ending March 31 was $82.89 billion.This surpassed LSEG forecasts of $81.39 billion, marking an 18% increase year-over-year.
• Net profit was $31.78 billion,or $4.27 per share, up from $25.82 billion or $3.46 per share in the same quarter last year. Adjusted earnings excluded a $14 million net profit decrease related to Microsoft's investment in OpenAI.
• Microsoft projects Q4 revenue between $86.7 billion and $87.8 billion, with Microsoft Azure cloud growth expected at 39% to 40% (excluding currency effects), surpassing StreetAccount's 37% forecast.
• CapEx in Q3 was $31.9 billion, a 49% increase but below analyst expectations of $34.9 billion.The 2026 investment budget is forecast at $190 billion,a 61% increase from 2025. The company anticipates about $25 billion impact from rising component prices.

Sources:Meta,Amazon,Alphabet,Microsoft,Financial Times, CNBC [1][2][3][4]

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