Tech giant earnings showdown: Why is Google the only winner?

On April 29, four tech giants—Google, Meta, Microsoft, and Amazon—released their earnings reports on the same day, and all of them exceeded Wall Street expectations. However, the market rewarded only one of them.

After-hours on Wednesday, April 29, Alphabet's stock surged more than 7%, making it the sole winner of this earnings season’s “Super Bowl”. Google Cloud's quarterly revenue grew 63% year-over-year to $20 billion, with the order backlog nearly doubling to $46.2 billion, providing a clear return logic for its massive capital expenditures. CEO Sundar Pichai said on the earnings call: “Our AI investments and full-stack approach are lighting up every corner of our business.”

Meanwhile, Meta fell more than 7% in after-hours trading, while Microsoft and Amazon each dropped around 2%. The shared dilemma of the three companies is: capital expenditures have surged, but the growth of their cloud businesses was either below expectations or just met them, and investors’ concerns over whether AI investments will translate into visible returns are rising significantly.

Analysts point out that the core dispute of this earnings season isn't about whose performance is better, but whose expenditures are more convincing. This reflects the market’s reassessment of tech giants’ AI narratives—investments backed by orders are rewarded, while spending without monetization paths gets punished.

Google: Cloud Business Booms, AI Investments Recognized

The highlight of Alphabet’s quarter was centered on Google Cloud.

The earnings report shows that cloud business revenue increased 63% year-over-year to $20 billion, operating profit margin reached 33%, far exceeding market expectations. More critically, Google Cloud’s order backlog nearly doubled from the previous quarter, reaching $46.2 billion, with AI demand and Tensor Processing Unit (TPU) hardware sales as the main drivers.

This number directly backs Alphabet’s plan to increase capital expenditures. The company raised its full-year capital expenditure guidance from the previous $175–185 billion to $180–190 billion, and hinted that capital expenditures will “increase significantly” in 2027.

Investors are so fascinated by Google Cloud’s growth that they are willing to overlook Alphabet’s increased capital expenditure expectations. Jake Behan, head of capital markets at Direxion, pointed out in the report: “Alphabet’s investments are paying off because they are backed by a $460 billion order backlog.”

CFO Anat Ashkenazi said on the call:

“The internal and external demand for our AI computational resources is at an unprecedented level.” Pichai also added: “If we could meet the demand, cloud business revenue could be even higher.”

The advertising business is also solid. Search ad revenue grew 19% year-over-year to $60.4 billion. YouTube ad revenue grew 11% to nearly $10 billion, and subscription, platform, and device business increased 19% to $12.4 billion.

Amazon & Microsoft: Cloud Growth in the Spotlight

Unlike Alphabet’s smooth success, Amazon and Microsoft had steady cloud performances but failed to fully meet the market’s high expectations.

Jefferies analyst Brent Thill wrote in his post-earnings report that although Amazon’s AWS business accelerated to 28% growth this quarter, the result was slightly below the 28%-30% target.

UBS analyst Stephen Ju also pointed out that AWS’s 28% growth was below UBS’s and investors’ respective expectations of 32% and over 30%, which will drag the stock down in the short term.

However, Amazon’s strong performance in e-commerce and advertising businesses and optimistic guidance for the second quarter provided some support for the stock price.

As for Microsoft, despite reporting a 5 million quarter-on-quarter increase in paid Copilot subscriptions, Azure’s 39% revenue growth only met expectations.

Barclays analyst Raimo Lenschow believes that Microsoft’s earnings were steady in the first quarter but there were no major surprises.

He pointed out that Azure’s stable growth (calculated at constant currency as 39%) compared to the significant acceleration by AWS (28%) and GCP (63%) could spark further debate in the market.

In addition, Microsoft plans to spend $19 billion in capital expenditures this year, lower than the market’s expected $38 billion, which could raise questions about its AI momentum.

Meta: Surge in Capital Expenditures Raises Concerns

Meta’s situation is even more awkward.

Analysts point out that although first quarter revenue grew 33% and exceeded expectations, it was not enough for investors to justify increased capital expenditures.

Meta now plans to spend $125–145 billion in 2026, up from the previous guidance of $115–135 billion. Unlike the other three super-scale cloud computing companies, Meta does not sell AI computing cloud services to customers.

UBS analyst Esha Vaish pointed out that the increased capital expenditure guidance and in-line second quarter revenue guidance offset the positive effects of first quarter revenue and profit beating expectations, dragging the stock down. Investors will closely follow data points from product development (such as business chatbots/Meta AI) and the reasons for increasing the capital expenditure budget.

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