AI cloud growth, capex surge, key takeaways

Each Meta and Google have revised their hefty capex projections for this yr by just a few billion {dollars}, with Meta now estimating as a lot as $145 billion capex whereas Google initiatives as much as $190 billion in capex spend. Taken collectively, the simultaneous earnings outcomes from the main know-how firms are an indicator of the present state of play within the AI race.

That is very true for the three massive cloud corporations – Amazon Net Companies (AWS), Microsoft Azure, and Google Cloud – that are renting out their servers to be used by OpenAI and Anthropic, together with a rising variety of different companies. Buyers are additionally searching for clues on broader tendencies, together with how Microsoft’s software program enterprise will carry out in an more and more AI-dominated market.

Right here’s a have a look at the important thing takeaways rising from this week’s earnings reviews.

Alphabet

In its earnings outcomes for Q1FY2026, Google dad or mum Alphabet reported 20 per cent progress in income from final yr, pushed by its surging cloud enterprise, which homes most of its enterprise AI services.

Google Cloud Platform noticed a 63 per cent enhance to $20.03 billion in quarterly income from the year-ago interval. Its cloud enterprise backlog additionally doubled in the course of the quarter to $460 billion, signalling robust future demand and progress potential. Its search promoting progress additionally accelerated to 19 per cent.

“Our enterprise AI options have grow to be our main progress driver for cloud for the primary time in Q1,” CEO Sundar Pichai informed analysts on the earnings name. Gemini Enterprise noticed a 40 per cent enhance in paid month-to-month lively customers from the earlier quarter, based on the CEO.

A few of Google Cloud’s potential progress may very well be attributed to its customized tensor processing models (TPU) chips, which Google is now not utilizing just for its personal knowledge centres but in addition promoting them to different firms since final yr. “We’re compute constrained within the close to time period. Our cloud income would have been greater if we had been in a position to meet the demand,” Pichai stated.

Alphabet reported $35.7 billion in capex in the course of the quarter, together with on actual property, servers, knowledge centres, and different infrastructure. The corporate additionally up to date its 2026 capex steering vary to $180 billion-$190 billion, up from its earlier estimate of $175 billion-$185 billion. Google’s 2027 capex can be anticipated to extend considerably, as per chief monetary officer Anat Ashkenazi. Shares of Google rose 7 per cent in after-hours buying and selling.

Amazon

Amazon’s income from its AWS cloud phase noticed a rise of 28 per cent year-over-year (YoY) to $37.59 billion, marking its quickest progress in additional than three years. The tech large beforehand introduced a number of latest AI-focused offers with Meta, Anthropic, and most just lately, OpenAI. Amazon’s large on-line procuring enterprise additionally confirmed robust 12 per cent progress within the first quarter to $64.3 billion.

By way of AI spending, Amazon didn’t report any change in its earlier capex projection of $200 billion by 2026. Nonetheless, CEO Andy Jassy highlighted the necessity to construct out much more knowledge centres and infrastructure to satisfy surging demand. “We’re in the midst of a few of the largest inflections of our lifetime, we’re effectively positioned to steer, and I’m very optimistic about what’s forward for our clients and Amazon,” Jassy stated in a press release.

Just like Google, Amazon additionally believes that its homegrown Trainium chip enterprise will probably be a key beneficiary of the AI growth. “It’s no secret that the AI labs are spending an unbelievable sum of money on compute,” Jassy stated, including that there’s additionally a good bit of standard enterprise demand for AI.

The corporate’s nascent satellite tv for pc web enterprise, Leo, can be pushing its capex spending greater because it must make sufficient satellites and ebook extra rocket launches to arrange its 7,700 satellite-constellation. Presently, Amazon Leo has about 270 satellites in low earth orbit and is predicted to begin providing business providers from the third quarter of 2026.

At the beginning of the primary quarter, Amazon introduced it will lay off 16,000 company staff, after chopping 14,000 staffers in October 2025. Its present headcount is 1.57 million staff globally. Shares of Amazon had been up by 4 per cent in prolonged buying and selling.

Apple

Apple on Thursday reported a stellar March quarter with 17 per cent greater income, pushed by over 22 per cent progress in iPhone revenues. Which means way more shoppers are upgrading their previous iPhones than has been the case for some time.

Apple executives additional stated they anticipate gross sales progress of 14 to 17 per cent within the present fiscal third quarter, pushed by its flagship iPhone 17 and the newly launched MacBook Neo. Nonetheless, the iPhone-maker additionally warned of continuous chip provide constraints amid the worldwide rise of reminiscence costs.

That is additionally Apple’s first quarterly earnings report following the announcement of a serious management change, with Tim Prepare dinner stepping down as CEO and handing over the reins to {hardware} government John Ternus from September 1, 2026, onwards.

In an earnings name on Thursday, Ternus described Prepare dinner as “one of many best enterprise leaders of all time” whereas the outgoing CEO stated, “There isn’t any one on this planet I belief extra to steer Apple into the long run than John Ternus.” Prepare dinner additionally identified that Apple had elevated spending on analysis and growth by 34 per cent within the quarter. Since Apple’s R&D expense has typically been round 8 per cent up to now few years, the rise means that AI is poised to usher in a brand new technology of gadgets and Apple clearly doesn’t need to be left behind.

Notably, Apple revealed that it’s shifting away from its long-standing money administration technique of aiming to be internet money impartial, as per a report by Bloomberg. This means that Apple desires to stockpile additional cash with a purpose to be ready for skyrocketing reminiscence chip costs. Having additional cash at hand might additionally assist Apple within the AI race by permitting it to purchase property that may come up on the market at a time when different massive tech firms are operating down their money reserves. Apple shares had been up almost 4 per cent in after-hours buying and selling.

Meta

Meta reported a 33 per cent enhance in income to $56.31 billion, marking the quickest quarter for progress since 2021. It underscores Meta CEO Mark Zuckerberg’s give attention to AI investments, which has reportedly strengthened the tech large’s core adverts enterprise however is but to provide new income streams.

Moreover, Meta’s platforms noticed a quarter-over-quarter drop in consumer progress on account of “web disruptions in Iran.” Its day by day lively individuals (DAP) of three.56 billion marks a 4 per cent enhance from the year-ago interval however a greater than 5 per cent drop from the fourth quarter DAP depend.

Meta additionally reported lower-than-expected capex at $19.84 billion, under the $27.57 billion common estimate. Nonetheless, the social media large raised its capex projection for 2026, from a previous vary of $115 billion-$135 billion to $125 billion-$145 billion. This has reportedly sparked considerations amongst buyers who’re apprehensive that the corporate’s investments in AI is not going to repay because it doesn’t have a cloud enterprise mannequin like Google, Amazon, and Microsoft.

In a name with analysts on Wednesday, Zuckerberg stated that he has confidence in his determination to additional increase AI spending. “We had a milestone quarter with robust momentum throughout our apps and the discharge of our first mannequin from Meta Superintelligence Labs. We’re on monitor to ship private superintelligence to billions of individuals,” Zuckerberg stated in a press release.

In April this yr, Meta debuted its first proprietary foundational AI mannequin referred to as Muse Spark, which is reportedly getting used to spice up its advert enterprise. Moreover, the corporate has introduced billion-dollar offers with Nvidia, AMD, and Broadcom for chips and different {hardware} in 2026. It’s also constructing a number of large knowledge centres to energy its AI efforts.

Nonetheless, Meta must persuade buyers with a transparent technique on the way it plans to make a return on these investments. Within the meantime, it’s seeking to offset its AI spending by lowering the corporate’s general workforce. “If we’re investing extra in a single space to serve our neighborhood, then meaning now we have much less capital to allocate to the opposite. So meaning we do must take down the scale of ​the ​firm considerably,” Zuckerberg was quoted as saying by Reuters.

Final week, Meta introduced it’s shedding 8,000 staff, following job cuts of about 1,000 individuals from its Actuality Labs unit earlier this yr. Its complete headcount is 77,986 as of March 31, 2026. “We don’t actually know what the optimum measurement of the corporate will probably be sooner or later,” Susan Li, Meta’s CFO, stated on an earnings name. Meta shares fell about 7 per cent in prolonged buying and selling on Wednesday.

Microsoft

Microsoft’s income grew to $82.89 billion, an 18 per cent YoY enhance with income from the corporate’s Azure enterprise, GitHub, server merchandise, and different cloud providers posting a 40 per cent income progress ($34.68 billion).

Whereas this implies a powerful progress fee of Microsoft’s cloud enterprise in regular occasions, it lags behind the quicker positive factors of Google Cloud and AWS, each of that are cloud suppliers for Anthropic and certain benefiting from the rising demand for Claude AI providers. Nonetheless, Microsoft additionally inked a take care of Anthropic final yr and will report simply as robust progress sooner or later as that partnership ramps up.

Notably, the report confirmed that extra persons are closely utilizing Microsoft’s AI-powered functions, dragging down revenue margins of its cloud unit by 5 share factors to 56 per cent within the first quarter in comparison with the year-ago interval. In response, Microsoft has moved to set extra aggressive pricing for patrons renting servers geared up with Nvidia chips, which might increase Azure margins as demand has far exceeded provide. On Monday, April 27, Microsoft stated it is going to cost GitHub Copilot clients extra charges based mostly on how a lot they use it.

It might observe the identical playbook for its different AI merchandise as effectively, akin to 365 Copilot, Microsoft’s flagship AI device that automates duties in Outlook, Groups, and different Workplace apps. Presently, Microsoft expenses a $30 monthly flat payment for enterprise customers of 365 Copilot. Paid customers of 365 Copilot grew by 33 per cent quarter-over-quarter to twenty million, which remains to be a small phase of the 400 million customers of its flagship Workplace 365 suite.

“Any per-user enterprise of ours, whether or not it’s productiveness or coding or safety, will grow to be a per-user and utilization enterprise. That’s clearly already taking place with [GitHub Copilot] coding with a few of the enterprise mannequin modifications we made this quarter…however it additionally speaks to the depth of utilization,” Nadella stated in an earnings name.

By way of AI spending, the Home windows-maker informed buyers that its capex for 2026 will attain $190 billion, up by 61 per cent from 2025, because of the prices of reminiscence chips, which has soared amid a worldwide provide crunch pushed by AI demand.

Amy Hood, Microsoft’s CFO, additional stated in an earnings name that she anticipates a $25 billion affect from greater element costs. Throughout its third fiscal quarter, Microsoft reported $31.9 billion in capex spend and finance leases, coming in barely under analyst estimates of $34.9 billion. Shares of Microsoft had been down 4.5 per cent on Thursday.