BIG TECH EARNINGS
📉 Amazon, Palantir, and Google Crash Up to 12% After Earnings

🩸 This week started as a bloodbath.

😰 Google and Amazon’s earnings sent the market into another panic over AI spending, with tech stocks crashing left and right. As of Thursday:

• The S&P 500 was down 2%

• The Nasdaq 100 was down 3.9%

✨ But then, Friday turned things around dramatically, with the S&P jumping 2% (its best day since May last year) and ending the week right where it started.

🤖 But tech still ended the week firmly in the red, with the Nasdaq-100 down 2% and Amazon crashing 12%.

🤔 So what’s going on? Well, at a high level, the market is starting to push back against the astronomical levels of AI spending from Big Tech with an unclear path to a return on investment.

💰 So with Amazon announcing its AI spending would hit $200B this year (up 60% from last year), and Google planning to spend $185B (double last year), the stakes are getting higher than ever, and investors are getting increasingly nervous. To put things into perspective, here’s the 4 hyperscalers’ spending estimates in 2026 compared to 2025:

🤿 So without further ado, let’s dive into the big tech earnings and what they mean for the market at large…

📉 Amazon Crashes 12% As AI Spending Soars

🤔 So with Amazon ($AMZN) falling 12% this week, and posting its worst trading day since 2022, how bad were the numbers?

📊 Well… here’s the summary:

• ✅ Revenue hit $213.4 billion vs. $211.3 billion expected, up 14% year-over-year

• ❌ Earnings per share came in at $1.95 vs $1.97 expected, up 5% year-over-year

  • ✅ Advertising revenue rose 23% to $21.3 billion

  • ✅ AWS revenue jumped 24% to $35.6 billion vs. $34.9 billion expected, its fastest growth in 13 quarters

🔮 For Q1 2026, Amazon estimates revenue between $173.5-$178.5 billion, roughly in line with expectations, with operating income guidance coming in below estimates.

😳 So with revenue beating targets, AI-driven AWS revenue soaring, and strong projections, why did the market have such a negative reaction?’

🏆 AWS Growth Hits Record, But Continues to Fall Below Rivals

💡 Well, one factor is how Amazon is doing compared to rivals in cloud computing… (which, as a reminder, is essentially providing on-demand access to AI models, enabling companies to build, train, and deploy AI without managing their own infrastructure).

😰 While its AI-driven AWS growth hit a 13-quarter record, it’s remained consistently below its competitors, Microsoft Azure and Google Cloud, meaning Amazon is losing market share in the AI cloud computing race (with Google Cloud growing an impressive 48% this quarter).

That said, it’s worth noting that Amazon is much bigger than the competition, and as the CEO called out on the earnings call, “it's very different having 24% year-over-year growth on $142 billion annualized run rate, than to have a higher-percentage growth on a meaningfully smaller base, which is the case with our competitors."

😮 But even though the growth is strong, the spending on data centers is far outpacing revenue growth, with investors getting increasingly concerned that tech companies like Amazon are ‘overspending.’

🔍 To put things in perspective, Amazon’s net profit for the quarter was $21.2B, but they’re on track to spend $200B this year.

🤔 So will Amazon run out of cash? And how are the CEO and analysts responding to all this? Well, before we dive deeper, a quick word from this week’s sponsor moomoo!

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BIG TECH EARNINGS CONT.
💰 Will Amazon Run Out of Cash?

Amazon’s CEO Andy Jassy was quick to defend Amazon’s spending, saying:

💸 And up until now, even with the massive spending, Amazon was generating positive cash flow, so it was able make these massive investments without dipping into its war chest of over $120B.

😳 Well, this year, that’s set to change, with Amazon on track to be the first Hyperscaler that spends more on AI than its cash flow.

😰 Of course, with $120B in the bank, Amazon could continue to spend like this for 6+ years, but the staggering spend numbers and draining cash balance are a big part of the reason investors are so stressed, with Wall Street Analysts pressing executives to:

😱 Barclays even projects that Amazon’s free cash flow will stay negative through 2028, with the rest of Big Tech following soon.

🎯 Many Analysts Remain Positive

👍 Despite the concerns, many analysts remain positive, with Amazon still a ‘Strong Buy’ across over 43 analyst ratings, with an average price target of $283, 34% above the current stock price.

💰 Executives at the big tech hyperscalers insist the spending is “driven by customer demand that’s outpacing supply”. And many analysts support this:

💡 Other analysts at Deutsche Bank see the infrastructure buildout creating a ”meaningful moat” for companies like Google, while Gil Luria at DA Davidson called the AI compute race “the next winner-take-all or winner-takes-most market.”

🤑 And given Big Tech’s confidence, even with the stock drop, the AI spending shows no sign of slowing.

🤔 But what about Google? What can we learn from their earnings about all this? Are they showing any better evidence that AI spending is paying off?

📊 Google Delivers Incredible Cloud Growth, But Falls 5% After AI Spending Increase

👏 Google ($GOOGL) reported earnings on Wednesday and absolutely crushed it, beating on every major metric and crossing the $400 billion annual revenue threshold for the first time in its history.

📊 By the numbers:

• ✅ Revenue hit $113.83 billion vs. $111.43 billion expected, up 18% year-over-year

• ✅ Earnings per share hit $2.82 vs $2.63 expected, up 31% year-over-year

• ✅ And most importantly, it’s AI-driven Google Cloud revenue exploded 47% to $17.66 billion this quarter, its fastest growth since 2021, beating expectations of $16.18 billion.

🚀 Google Shows AI Momentum is Real

🤖 On top of the amazing earnings results, Google showed strong traction on its AI platforms (like AI Overviews in Search), with its core LLM product Gemini reaching a record 750m monthly active users, up from 650m last quarter.

⚡ Additionally, according to CEO Sundar Pichai, Google reduced Gemini serving costs by 78% in 2025 through optimizations, efficiencies (i.e., using more TPUs instead of Nvidia GPUs to lower costs), and more:

☁️ Google Cloud’s (GCP) massive 48% growth was driven by continued enterprise AI infrastructure spend and core GCP products like compute and cloud storage, with the company’s backlog growing 55% quarter-over-quarter to a record $240 billion.

🌟 Google addressed the concerns about overspending head-on, saying:

But despite the truly amazing results, the stock still ended the week down ~5% after Google annouced is planned to spend $175B-$185B on AI capex this year.

❓ The Big Question: Will AI Investments Pay Off?

🤔 And all this brings us back to the big question that investors have been asking over and over again for the past year now: Will the massive AI spending pay off?

On one hand, there’s a lot of evidence that it could, with one analyst saying:

📉 But as we said last week, based on the stock market reaction, investors are growing tired of the massive spending. But at least for now, the Hyperscalers seem dead-set on AI investment at all costs, and it looks like investors will have to get on board, or accept that short-term pain could be the price of long-term AI dominance.

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BIG TECH EARNINGS CONT.
🔥 Earnings Rapid Fire: Palantir, MicroStrategy, and AMD

🛡️ Palantir Drops 7% After Earnings Amid AI Jitters

• Palantir (PLTR) stock fell ~7% this week despite strong results, amid broader AI/software sell-offs

• Q4 2025 earnings beat expectations with revenue climbing ~70% YoY to ~$1.41 billion and earnings per share beat forecasts, driven by strong U.S. commercial and government demand for its AI-enabled platforms.

• 2026 revenue outlook smashed forecasts with guidance of roughly ~$7.20 billion (~61% growth), highlighting strong contract backlog and accelerating AI adoption.

• U.S. commercial revenue continued to be a standout, posting triple-digit growth year-over-year as enterprises ramped up spending on AI-driven data tools.

• Despite the strong results, Palantir trades at a very rich valuation of over 100x forward earnings, far above most large-cap software peers, leaving the stock vulnerable to pullbacks.

🥶 MicroStrategy Falls 10% After Earnings Amid Fears of ‘Crypto Winter’

• MicroStrategy (MSTR) plunged 29% after reporting Q4 2025 results with a $12.4 billion net loss, largely from markdowns on its massive Bitcoin holdings as the crypto market slumped.

• Bitcoin’s price collapse has cut deeply into the value of Strategy’s ~713,500 BTC stash, amplifying unrealized losses and driving extreme volatility in the stock.

• Strategy’s market net asset value (mNAV) has compressed below 1, meaning the stock now trades at a discount to its Bitcoin holdings.

• Management maintains the balance sheet is strong and stresses long-term conviction in Bitcoin, but investors are now debating whether the firm’s leveraged, debt-funded BTC accumulation is sustainable if prices remain down.

• Despite the selloff, MSTR jumped +26% on Friday, recovering some of the week’s losses as bitcoin rebounded, showing how tightly the stock trades as a leveraged proxy for BTC.

• Hedge fund manager Michael Burry (made famous by the ‘Big Short’) warned that bitcoin speculation is showing similarities to past bubbles, saying leverage could worsen the downside if prices continue to fall, adding to fears around crypto-linked stocks.

🤖 AMD Drops Over 12% After Weaker Than Expected Forecasts

• AMD ($AMD) fell more than -18% after a softer-than-expected outlook, overshadowing a quarterly beat and raising concerns about near-term growth momentum.

• Management acknowledged that competition in AI chips remains intense, with Nvidia continuing to dominate high-end data center spend.

• After a massive run over the past year, AMD’s valuation left little room for guidance missteps, and the stock reaction shows how sensitive AI names are to forward expectations rather than backward-looking beats.

• The stock bounced back a little on Friday, jumping 7%, amid a broader tech rebound, though shares ended the week down 12% as investors reassess AMD’s AI growth trajectory

🎁 And that’s a wrap! I hope you enjoyed this week’s earnings recap. For those new here, my name is Max (aka @maxstocks), and I’m the CEO of Blossom and author of the Weekly Buzz! Over the past month, I’ve also been supported by the awesome @jacobb who I recommend dropping a follow if you enjoy deep dive fundamental analysis on some of the biggest stocks on Blossom.

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