Good morning. Another Big Tech Earningspalooza™ has begun, so let’s get right to it, shall we? —Andrew Nusca
TL;DR
- Meta's Q3 revenue rose 26% to $51.2 billion, but net income fell 83% due to tax expenses and increased AI spending.
- Microsoft's cloud revenue grew 26% to $49.1 billion, with Azure up 40%, but production capacity limits persist.
- Alphabet achieved its first $100 billion quarter with $102.3 billion revenue, increasing 2025 capital expenditure projections.
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Meta's revenue experiences a significant increase, alongside a rise in its artificial intelligence expenditures.
Meta keeps on cruisin’.
The parent company of Facebook, Instagram, and WhatsApp on Wednesday posted the company reported third-quarter revenue of $51.2 billion, marking a 26% increase compared to the prior year's third quarter and significantly exceeding the projected $49.4 billion.
It was meant to be a cause for rejoicing, but that sentiment evaporated when the firm announced an 83% decline in net income, reaching $2.7 billion. This downturn was attributed to a singular income tax expense amounting to nearly $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 firm raised its projected capital spending to a range of $70 billion to $72 billion, an increase from the previous $66 billion to $72 billion forecast. Ahem!
The primary driver of that rise is infrastructure expenses, closely followed by employee pay, particularly for the highly compensated AI professionals recruited this year.
Meta shares dropped 8%, to about $683, in after-hours trading. —AN
Microsoft's cloud operations are still more extensive than it can effectively handle.
Microsoft's chief financial officer, Amy Hood, kicked off 2025 by stating that the tech giant experienced greater demand for its cloud computing services than it could accommodate.
Nearly a year later, it’s still true.
Microsoft said Wednesday the company's cloud computing revenue saw a 26% increase in its first quarter, reaching $49.1 billion compared to the prior year's corresponding period, driven by ongoing robust customer demand.
Furthermore, Microsoft anticipates being limited by its production capacity throughout the rest of the fiscal year, according to Hood.
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.
Satya Nadella, much like Mark Zuckerberg, indicated he wouldn't be easing up on his efforts: “We continue to increase our investments in AI across both capital and talent to meet the massive opportunity ahead.” —AN
Alphabet achieves its initial $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.
Regarding current trends: Alphabet has increased its capital expenditure projection for 2025, now anticipating spending between $91 billion and $93 billion, a significant rise from the $85 billion forecast made only three months prior.
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. Another internet brand has been acquired by The Italian owner of Evernote and Vimeo for an estimated $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.