TOP STORY
📈 Google Soars 12% and Meta Sinks 10%: A Big Tech Earnings Recap

🌍 After months of writing about the US-Iran war and geopolitical whiplash in the markets, things have finally cooled down (with the ceasefire holding in place), and we can officially turn our focus elsewhere: the highly anticipated Mag 7 Q1 earnings of the largest tech companies.

🔥 The high-level? Earnings were strong, with Big Tech profit growth continuing to outpace the rest of the market. April was a stellar month, posting the strongest monthly returns since 2020 and the indexes hitting new all-time highs. Across April:

• The S&P 500 rose +10.8%

• The Nasdaq 100 rose +16.7%

• The TSX rose 3.4%

🏆 April also marked the second-best April for the S&P 500 since 1950, with S&P earnings growth reaching 27% year-over-year (the strongest since late 2021), and 84% of companies beating analyst estimates.

🤿 So let’s dive into what the Big Tech earnings are showing us about the markets…

📊 Big Tech Earnings: The Exec Sum

💸 Now, before we get into the meat and potatoes of each of Meta, Google, Apple, Amazon, and Microsoft earnings, let me give you the tldr.

🏗️ The underlying story coming into earnings was the rampant spend on AI CapEx, which is projected to hit over ~$650 billion in 2026 alone (for perspective, that’s more than the military budgets of China, Russia, and Germany combined).

😬 Investors have become increasingly skeptical about whether these investments will pay off this year, leading to many of the Mag 7 companies sitting well below their all-time highs (especially Microsoft, which is down 24% from its October highs).

😰 Adding to the angst, right before earnings, news broke that OpenAI missed its revenue and user targets (raising questions about its massive data center spending commitments).

💡 But now that numbers are out, one thing is clear: while the numbers were strong across the board, the market is no longer willing to give all Big Tech an AI spending hall pass and is starting to evaluate each one individually.

🗞️ The headlines from the major publications give quite a good summary of the situation:

• 🏆 Big Tech Earnings Show Split Between AI Trade Winners and Losers (Bloomberg)

• 💰 Big Tech Is Spending an Unprecedented Amount on AI. Only 1 Company Is Making It Work. (Barrons)

• 📝 The market isn’t grading all Big Tech earnings the same (CNBC)

📈 And looking at the stock prices this week (and even over the past 6 months), it’s clear who the winners and losers are:

• Alphabet ($GOOG): +12% this week, +35% in the past 6 months

• Apple ($AAPL): +3.4% this week, +4.2% in the past 6 months

• Amazon ($AMZN): +1.7% this week, +5.7% in the past 6 months

• Microsoft ($MSFT): -2.5% this week, -19.9% in the past 6 months

• Meta ($META): -9.8% this week, -4.5% in the past 6 months

❌ The ‘Not Everyone is Going to Win’ Stage

🏆 The clear stand-out from this quarter’s earnings was Google, with an insane 63% year-over-year growth in its AI-driven cloud revenue, roaring ahead of Microsoft and Amazon (which posted 39% growth and 28% growth across their cloud divisions).

💬 As the Head of Markets macro strategy at BNY puts it:

📉 Particularly, Microsoft, which used to be a frontrunner, is being increasingly punished. To add to its worries, OpenAI (which Microsoft has a huge stake in) is ‘drifting to Amazon’ with OpenAI restructuring its relationship with Microsoft for the second time in six months.

✨ But it’s worth noting that while Google is the favourite today, this can change quickly. Just last year, Google was arguably the ‘loser’ and has since had a remarkable turnaround.

🙋‍♂️ With that in mind, don’t be too surprised if you see me sell some of my Big Tech stocks and reallocate into ETFs (I have individual positions in Meta, Microsoft, Amazon, and Google), as I don’t feel I have enough time to truly research enough and build strong conviction on who I think the winners and losers will be with the rapidly changing landscape.

👀 Now that we’ve covered the bigger picture, let’s dive into each of the earnings, but first a quick word from this week’s sponsor WisdomTree!

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BIG TECH EARNINGS
🚀 Google Surges 12% As Cloud Hits $20 Billion Per Quarter For the First Time

🏅 First off on the deep dives, let’s look at the biggest winner: Alphabet, which crushed Wall Street’s expectations, and saw its cloud business officially cross the $20 billion in quarterly revenue mark (its highest ever).

💰 By the numbers:

• ✅ Revenue: $109.9 billion vs. $107.2 billion expected, +22% year-over-year

• ✅ EPS: $5.11 vs. $2.63 expected, +82% year-over-year (includes a $37 billion gain in unrealized investments)

  • ✅ Google Cloud: $20.03 billion vs. $18.05 billion expected, +63% year-over-year (above estimates of +50.1%)

  • ✅ Google Search: $60.4 billion, +19% year-over-year

🏗️ The company also updated its full-year 2026 CapEx guidance to $180-$190 billion (up from $175-$185 billion), with Alphabet CFO Anat Ashkenazi saying 2027 CapEx is expected to “significantly increase” from 2026 levels.

🚀 Shares dipped on the CapEx raise in after-hours trading, but ended the week up 12% and the month up ~30% (it’s best month since 2004).

☁️ Cloud Revenues Soar, Crushing Microsoft and Amazon’s Growth

🏆 The biggest headline for Google was its cloud revenue, which jumped an incredible 63%, beating out Microsoft and Amazon and showing a staggering acceleration from its last two quarters.

🥇 This makes Google Cloud the fastest-growing Big Tech cloud platform, with a massive $460 billion cloud backlog that nearly doubled from last quarter.

💬 And according to Google, this massive growth in cloud and a rapidly growing cloud backlog is a big justification for its continued CapEx spend:

🚀 Revenue from products built on Google’s GenAI models also grew nearly 800% year-over-year this quarter, with Gemini Enterprise paid monthly active users growing 40% quarter-over-quarter.

🔥 Overall, Google's remarkable turnaround continues. A year ago, Wall Street was worried ChatGPT would eat its search business. Instead, search grew 19%, cloud just had its best quarter ever.

🎯 Analysts remain extremely bullish on the stock, with an average price target of $413, 7% above the current price, and a ‘strong buy’ rating. But with amazing results come even higher expectations, and so the pressure will be on for Google to keep up this incredible momentum.

👎 Now, let’s turn our eyes to the biggest loser this week: Meta.

📉 Meta Falls 9% Amid Rising CapEx Spend and Legal Scrutiny

🎯 Meta also beat on Wall Street’s expectations, but saw a much worse reaction from the market. By the numbers:

• ✅ Revenue: $56.31 billion vs. $55.52 billion expected, +33% year-over-year

• ✅ EPS: $10.44 vs. $6.79 expected, +62% year-over-year (includes a $8.03 billion tax benefit)

  • Ad impressions: +19% year-over-year

  • Average price per ad: +12% year-over-year

  • Family daily active people: 3.56 billion, +4% year-over-year

📉 But despite the strong results, the stock fell nearly 10% across the week. So what went wrong?

💰 Capex Outpaces Ad Growth

💣 The reason for the drop? Astronomical AI spending.

💰 Meta raised its full-year 2026 CapEx guidance to $125-145 billion, up from $115-135 billion. That's nearly double what it spent in 2025, and more than 2024 and 2025 combined. And as we’ve seen, the market is increasingly demanding to see a return on this massive spending.

😰 Meta's AI investment is embedded in the ad business (better targeting, Reels recommendations, content ranking), and while Ad revenue grew 33% this quarter, CapEx growth has been outpacing ad revenue growth for over a year now, and the gap is only widening.

💸 And then there's the cash flow math. JP Morgan analyst Doug Anmuth now projects Meta's CapEx will climb to $202 billion by 2027, pushing the company into negative free cash flow of roughly -$4 billion this year and -$24 billion in 2027. For a company that generated $43.6 billion in free cash flow in 2025, that's a dramatic reversal.

🧑‍⚖️ Meta’s Legal Troubles Aren’t Helping

🏛️ Adding to the pressure, Meta is still dealing with the fallout from the landmark social media addiction verdict in March, where a jury found Meta liable for intentionally designing addictive platforms that harmed young users.

💸 Meta was ordered to pay $375 million in a separate child exploitation case, and the addiction verdict could set the precedent for roughly 2,000 pending lawsuits from parents and school districts.

🎯 Analysts Are Still Bullish

✨ That said, analysts still largely believe in the long-term thesis. The consensus remains a "Strong Buy" with an average price target of $827, roughly 36% above the current price, with most targets sitting in the $800-$1,000 range.

💬 This quote from Agar Capital sums up the sentiment nicely:

⭐️ Ok, now that we’ve covered the biggest winner and loser, let’s do a rapid-fire breakdown of the final 3. But first, a quick note about our upcoming IRL event!our other sponsor this week Dynamic Funds.

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BIG TECH EARNINGS CONT.
📣 Earnings Recap Cont: Amazon, Apple, and Microsoft

☁️ Amazon’s Up 2% After AWS Has Its Fastest Growth In Over Three Years

🏆 Amazon beat on revenue and earnings, but the core takeaway this quarter was AWS, which reached its fastest growth rate in more than three years:

• ✅ Revenue: $181.5 billion vs. $177.2 billion expected, +17% year-over-year

• ✅ EPS: $2.78 vs. $1.62 expected, +75% year-over-year

  • ✅ AWS: $37.59 billion, +28% year-over-year (the fastest in 3+ years)

📢 On the earnings call, Andy Jassy called AI "a once-in-a-lifetime opportunity, where every application that we know of is going to be reinvented," as he committed Amazon to approximately $200 billion in 2026 CapEx (up from $131 billion last year).

😰 Amazon is projected to be one of the first Big Tech hyperscalers to reach negative free cash flow this year. But unlike Meta, the market shrugged it off. AWS is showing clear acceleration, and the $200 billion spend looks less like a gamble when cloud revenue is reaccelerating alongside it.

🍎 Apple Up 3.4% Despite iPhone Revenue Miss

🏆 Apple set a March quarter record for total revenue this week, with iPhone revenue, EPS, and Services hitting new all-time highs.

🌟 By the numbers:

• ✅ Revenue: $111.18 billion vs. $109.66 billion expected, +17% year-over-year

• ✅ EPS: $2.01 vs. $1.95 expected, +22% year-over-year

  • ✅ Services: $30.98 billion (all-time high) vs. $30.39 billion expected

  • ❌ iPhone revenue: $56.99 billion vs. $57.21 billion expected

🛡️ Despite iPhone revenue missing for the second time in three quarters, Services revenue (which has much higher margins) and overall guidance more than offset the concern.

🎁 Apple issued a better-than-expected revenue forecast for the next quarter (guiding 14-17% growth vs. Wall Street’s expectation of 9.5%), plus announced a $100 billion buyback program alongside a 4% dividend raise, all helping to send the stock up ~3% in after-hours trading.

💡 Apple continues to be the odd one out in the AI CapEx arms race. While the other four are pouring hundreds of billions into data centers, Apple isn't spending anywhere near the same level, and the market seems to like that discipline right now.

🤖 But as we covered last week, new CEO John Ternus is inheriting a big AI challenge: Siri is now powered by Google's Gemini, the AI wearables roadmap is still early, and investors are growing impatient with Apple's AI strategy. These earnings bought him some goodwill, but the real test comes in September when the Gemini-powered Siri launches with iPhone 18. That's when we'll find out whether Apple's restraint on spending was strategic patience or just falling further behind.

🤖 Microsoft Falls 2.5% After Disappointing Forward Outlook

🪟 Next in line we had Microsoft, beating on the top and bottom line as well.

• ✅ Revenue: $82.9 billion vs. $81.4 billion expected, up 18% year-over-year

• ✅ EPS: $4.27 vs. $4.06 expected, up 23% year-over-year

  • ✅ Azure: +40% year-over-year (+38% last quarter) vs. +39% expected

  • Microsoft’s AI business revenue (Copilot, GitHub Copilot, Azure OpenAI Service) surpassed an annualized revenue run rate of $37 billion, up 123% year-over-year

🔮 The Q1 numbers were solid, but the outlook gave investors pause. Microsoft guided Q2 revenue of $86.7-$87.8 billion, below the $87.5 billion consensus, and raised its full-year CapEx to ~$190 billion (up from $150 billion). Azure backlog also grew +99% to $627 billion, though most of that is OpenAI commitments.

😰 And therein lies the problem: Microsoft's AI story is increasingly tied to OpenAI, which just missed its own revenue and user targets. With OpenAI restructuring its relationship with Microsoft for the second time in six months and increasingly drifting toward Amazon, investors are questioning how much of that $627 billion backlog is truly durable.

📉 The stock fell 2.5% on the week and remains down 24% from its October highs, making it the worst performer of the Mag 7 over the past 6 months.

🔮 The Big Picture

🎯 Zooming out, this earnings season made one thing crystal clear: the era of the market giving all Big Tech a pass on AI spending is over. Every company beat on revenue and earnings, but the stock moves ranged from +12% to -10%.

⚡️ Going forward, I expect this pattern to intensify. The companies that can show a clear line from AI dollars spent to revenue generated will keep getting rewarded. The ones still asking investors to take it on faith will keep getting scrutinized. As Bob Savage at BNY put it in this week's opening, we're officially in the "not everyone is going to win" stage.

📊 And that’s a wrap on Big Tech earnings! I hope you enjoyed the breakdown and if you want to join the discussion, I just kicked off a discussion post on Blossom here - excited to hear your thoughts!

FROM THE BLOSSOM COMMUNITY
⭐️ Top Discussions of the Week

👇 Click to see the full post!