Tech giants report earnings simultaneously, Google surges, Meta plunges

Last night, after the U.S. stock market opened, four U.S. mega-cap tech companies—Microsoft, Google, Meta, and Amazon—simultaneously issued their latest quarterly financial reports. This was the first quarter in which the Mag 7 were almost all disclosing around the same time, and the market had already been prepared to receive four “everything’s fine” reports. Revenues and EPS also all exceeded analysts’ consensus expectations. But the market reaction cleanly split them into two groups: Google surged 7.24%, Amazon rose by about 1.3%, while Microsoft and Meta fell by roughly 2.4% and 6.6%, respectively.

Collectively, these four companies have a market value of about $12 trillion, representing more than a quarter of the S&P 500’s weighting. When all four earnings reports were released on the same night, the market should have been forced to judge based on a single shared variable. Instead of one unified direction, what emerged was a clear divergence grouped in pairs by “conversion progress.”

“Beating expectations” isn’t valuable anymore

The revenue beats for all four companies clustered between 1.5% and 2.7%. Google’s revenue was $109.9 billion, 2.71% above consensus. Amazon’s revenue was $181.5 billion, 2.37% above. Microsoft’s revenue was $82.9 billion, 1.84% above. Meta’s revenue was $56.3 billion, 1.48% above. These are not four “just barely meeting” reports, but four evenly outstanding ones.

The EPS story looks even more dramatic on the surface. Google’s GAAP EPS was $5.11, 91% above expectations. Amazon’s EPS was $2.78, 70% above. Meta’s GAAP EPS was $10.44. Microsoft’s adjusted EPS was $4.27, about 5% above. But EPS can’t be compared directly across companies. Google’s figures are distorted by a $36.9 billion unrealized equity gain, Meta includes an $8 billion one-time income tax credit, and Amazon’s high beat is mainly because analysts’ estimates of AWS profit margin improvement were too conservative. So in this chart, to measure “beating expectations” consistently, we use revenue beats to put all four companies on the same ruler.

And the strange thing is on that very ruler. Amazon’s beat margin ranked second, yet after-hours it only gained a modest 1.3%. Google’s beat margin ranked third, but its after-hours gain was the largest among the four at 7.24%. Meta’s beat margin was the smallest, and it also fell the hardest. There is no simple logic of “the bigger the beat, the more it rises.”

In other words, that night the market wasn’t trading the current quarter’s performance—it was trading two sets of figures released after the performance.

$710 billion, a record Capex

For 2026 capital expenditure guidance, all four companies are going all in.

In the earnings call, Microsoft locked in 2026 calendar-year capex at $190 billion. CFO Amy Hood explained that about $25 billion of this is incremental cost driven by higher memory prices. Previously, Visible Alpha’s consensus expectation was only $154.6 billion. In one night, Microsoft added $35.4 billion to its spending outlook to the market.

Meta raised its full-year capex range from $115–$135 billion to $125–$145 billion—an overall increase of $10 billion in the range. The CFO attributed the increase to “rising component prices” and “preparing for future-year capacity.” The same report also disclosed that DAU fell sequentially. Put together, it means “we’re spending more aggressively now, but the growth momentum is loosening.”

Google adjusted its range from $175–$185 billion to $180–$190 billion, lifting it by $5 billion overall. This is the most restrained upward revision among the four. The CFO also signaled that 2027 capex would continue to “increase significantly.”

Amazon maintained the $200 billion guidance it issued in February. But actual Q1 capex has already reached $44.2 billion, up 77% year over year. If it keeps this pace, the full year will likely surpass the top end of guidance. In the same period, TTM free cash flow fell from $25.9 billion last year to $1.2 billion, a 95% drop.

If you add the midpoints of the four companies’ 2026 capex guidance, the total comes to $710 billion. At $710 billion, this is also unusually high even within each company’s own history.

In 2022, these four companies combined capex was about $150 billion; in 2023 it basically went nowhere; and it was not until 2024 that it jumped to $215 billion for the first time. Over the two years from 2022 to 2024, the four together spent an extra $65 billion. 2024 is the true turning point. Starting from that year, each year’s capex has been added on top of the previous year. The 2025 estimated figure is $355 billion—roughly doubling from 2024. Then comes $710 billion in 2026.

And that final jump is more drastic than in any earlier year: the single-year increase from 2025 to 2026 is $355 billion, which effectively creates an entire year’s worth of spending volume from scratch. Over four years, capex has shifted from “each company building a few data centers each year” to “the four companies combined building an entire country’s worth of infrastructure each year.”

This chart is reshaping the supply-and-demand balance across the entire industry chain. When Microsoft raised its capex guidance, it specifically noted that $25 billion came from “high memory price shocks,” and Meta also mentioned component price increases. Capex numbers themselves are getting bigger and bigger, but a significant portion is actually being extracted in reverse upstream in the computing power supply chain—HBM, CoWoS packaging, power, land, transformers—everything is rising. Spending $10 billion in 2026 can buy less compute capacity than in 2024.

The two that saw increases—what did they do right?

All four companies are spending similar amounts of capex, but only Google and Amazon simultaneously produced evidence this quarter that “the money is starting to convert.”

Google Cloud’s revenue this quarter was $20 billion, with a year-over-year growth rate of 63%. For the first time, this number brings Google Cloud’s scale close to that of AWS and Azure. Operating profit jumped from $2.2 billion in the same period last year to $6.6 billion—tripling. Backlog of unexecuted contracts rose nearly twofold quarter over quarter to $460 billion. This means revenue visibility for the coming years has been boosted in one shot.

At the same time, Gemini Enterprise paid MAU grew 40% quarter over quarter, and total paid subscriptions across the whole company reached 350 million. The year’s biggest bearish logic—“AI is stealing search traffic”—was temporarily shut down by this report.

Amazon, meanwhile, lifted AWS to a new high for the first time in 15 quarters. AWS revenue this quarter was $37.6 billion, up 28% year over year, exceeding market expectations of 26%. AWS operating profit was $14.2 billion, 10% above StreetAccount’s consensus. In the same period, the advertising business was $17.2 billion, up 24% year over year, also exceeding market expectations. With both high-profit businesses accelerating at the same time, the market was willing—at least for now—to tolerate Amazon’s $200 billion capex pace as a key condition.

Compared with Microsoft and Meta: Microsoft Azure’s growth rate is 39%–40% (constant FX basis). It looks good on the books, but CFO Amy Hood directly told investors that the shortage of Azure compute capacity is expected to persist at least until the end of FY2026—i.e., after June 2026. Customer demand has been running ahead of supply, with bottlenecks in GPU and data center construction. Microsoft will need several more quarters to convert capex into billable Azure revenue.

Meta’s performance itself is strong, but the overall upward revision to the capex range combined with a sequential decline in DAU is what the market sees as “we’re spending more now, but engagement at the front end is loosening.” This is the worst picture among the four in terms of market reaction.

The earnings reports issued the same day from these four companies make one thing clear: the ability to beat consensus expectations is now excessive. The market has started to group the companies according to “conversion progress.” Companies whose capex can flow back into revenue or profit within the same quarter are rewarded. Companies that can only show bigger expense sheets are penalized.

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