The Wall Street is split on the tech front, even after all four of the tech titans posted better-than-expected financial performance for their respective quarters under review.
While shares of Amazon initially jumped 4% in early trade, they slipped to red; Meta Platforms took the brunt of investors' heat and plunged 10% within the first hour of the opening bell, and Microsoft also traded over 5% lower.
However, Alphabet stood out amid the rout and rose nearly 8% to trade at around $377. What made the market move in favour of the Google parent?
Alphabet's quarterly performance exceeded Street expectations, with the company's cloud segment emerging as the growth engine, boosted by strong demand for our AI products and infrastructure.
Gemini Enterprise also saw sturfy momentum, with 40% growth quarter-over-quarter in paid monthly active users.
Moreover, in subscriptions, it was reportedly Alphabet's strongest quarter ever for their consumer AI plans, primarily driven by adoption of the Gemini app.
With its fineprint delving deep into artificial intelligence growth, one glaring possibility is that company was able to justify its hefty AI spending.
Notably, CEO Sundar Pichai announced plans of scaling up the company's full-year capital expenditure to between $180 billion and $190 billion. The capex stood between $175 billion and $185 billion previously.
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Sadly, on the extreme end of this spectrum is Mark Zuckerberg's Meta Platforms Inc., which plunged over 10% in early trade and continued to trade in the same range at levels of around $604.
Even as Meta topped analysts' expectations and registered a 33% jump in its Q1 revenue year-on-year to $56,311 from $42,314 in FY25 and earnings per share grew $6.43 to $10.44; it failed to justify increasing its capex to between $125 billion and $145 billion.
Asked how this spending would lead to results, Zuckerberg said on a post earnings conference call, "I don't think we have a very precise plan for exactly how each product is going to scale or anything like that."
Amazon's stock stayed choppy during trade and fell after opening in the green, trading nearly 1.5% lower at around $259. Revenue in Amazon's cloud segment increased 28% year-on-year to $37.59 billion, in-line with Wall Street expectation of 26%-30%.
At the same time, free cash flow for the past twelve months fell to $1.2 billion, plummeting 95% year over year, dragged down by AI investments, the company reportedly said.
Amazon's capex forecast has also increased primarily on the back of investments into 'Leo' its nascent internet-from-space service.
Microsoft stayed in the red territory from the get-go, sinking 5% at open and trading 4.9% lower at $403.82 as of 11:30 a.m. EST.
The company beat the top and bottom lines expectations along with estimates on Azure cloud growth, however, its quarterly revenue and operating margin guidance fell short of Wall Street projections.
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