Good morning. Another Big Tech Earningspalooza™ has begun, so let’s get right to it, shall we? —Andrew Nusca
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Meta revenue soars, but so do AI expenses
Meta keeps on cruisin’.
The parent company of Facebook, Instagram, and WhatsApp on Wednesday posted $51.2 billion in third-quarter revenue, a 26% leap from the same quarter a year ago that handily topped estimates of about $49.4 billion.
It should have been a reason for celebration—that is, until the company reported an 83% drop in net income to $2.7 billion (thanks to a one-time income tax charge of almost $16 billion—whaddyagonnado) and plans to spend even more money on AI than it previously predicted.
“Our current expectation is that capital expenditures dollar growth will be notably larger in 2026 than 2025,” the company said in a statement. “We also anticipate total expenses will grow at a significantly faster percentage rate in 2026 than 2025.”
The company upped its capital expenditures outlook to between $70 billion and $72 billion, up from $66 billion to $72 billion. Ahem!
What’s driving that increase, by the way? Infrastructure costs above all, with employee compensation—notably for all that pricey AI talent it hired this year—drafting behind.
Meta shares dropped 8%, to about $683, in after-hours trading. —AN
Microsoft still has more cloud business than it can manage
Microsoft CFO Amy Hood began 2025 by saying that the company had more demand for its cloud computing services than it had the capacity to entertain.
Nearly a year later, it’s still true.
Microsoft said Wednesday that its first-quarter cloud computing revenue jumped 26%, to $49.1 billion, from the same period a year ago as customer demand continues to swell.
What’s more, Microsoft will remain capacity constrained for the remainder of the fiscal year, Hood said.
The mix of AI boom and longstanding corporate relationships has been good to Microsoft. For Q1, the company bested analyst expectations with earnings of $3.72 per share on revenue of $77.7 billion. Wall Street was looking for $3.67 per share on revenue of $75.33 billion.
Azure revenue in Q1 was up 40% from a year ago. Microsoft’s “Intelligent Cloud” unit (which includes Azure as well as AI services, business applications, databases, and Internet of Things) enjoyed quarterly revenue of $30.9 billion, up 28% from a year ago.
Like Mark Zuckerberg, Satya Nadella said he had no intention of taking his foot off the gas: “We continue to increase our investments in AI across both capital and talent to meet the massive opportunity ahead.” —AN
Alphabet logs its first $100 billion quarter
Three’s a trend, as they say. If Meta and Microsoft reported record revenue, surely Alphabet would, too?
To quote Cousin Eddie: Bingo.
Google’s parent company said Wednesday that it raked in $102.3 billion in third-quarter revenue—its first 12-digit fiscal quarter—beating estimates of about $99.9 billion.
Net income jumped, coming in at $35 billion, a 33% increase.
Cloud revenue leapt 34% to $15.2 billion, beating estimates of about $14.7 billion.
Speaking of trends: Alphabet raised its 2025 capex forecast to between $91 billion and $93 billion, after projecting $85 billion just three months ago.
It won’t stop there. “Looking out to 2026, we expect a significant increase in capex,” CFO Anat Ashkenazi added on a call with investors. (Gird your loins, shareholders.)
Alphabet shares were up 5%, to about $294, in after-hours trading. —AN
More tech
—Microsoft Azure suffers an outage. Can someone check if Google Cloud is OK?
—Nvidia is now worth $5 trillion. First company in history to cross the threshold.
—Amazon opens Project Rainier. Not an Alice in Chains album, but a 1,200-acre AI data center in Indiana.
—Apollo sells AOL to Bending Spoons. The Italian owner of Evernote and Vimeo picks up another Internet brand for a reported $1.5 billion.
—An OpenAI IPO? “Likely,” CEO Sam Altman says. (When? 2027, reportedly.)
—Mastercard to acquire crypto startup Zerohash. Alas, it will not cost zerocash.
—R.I.P. white collar workers. “Tens of thousands” enter “a stagnant job market with seemingly no place for them,” in part because of AI.