Alphabet shares surge on strong AI model reception, Apple deal
AI bubble fears persist despite cloud revenue growth
Microsoft faces AI capacity constraints until June
Meta’s spending, hiring spree likely to weigh on profit growth
By Aditya Soni
Jan 27 (Reuters) - Microsoft and Meta will kick off Big Tech earnings this week under pressure to prove that their costly bets on artificial intelligence can power another year of strong growth as a resurgent Alphabet takes the lead in the high-stakes race.
The companies, along with Amazon, are expected to lift their AI spending by 30% to more than $500 billion this year, an unprecedented outlay that will sharpen investor scrutiny.
Doubts have deepened whether Microsoft (MSFT.O) has squandered a first-mover advantage in AI it secured through its OpenAI investment. Meta (META.O) too is on the hook to show payoffs from its expensive push into superintelligence.
Both stocks declined more than 6% in the last three months of 2025, while Amazon (AMZN.O) notched a small 5.1% gain after its November deal with OpenAI signaled that the largest cloud-computing provider in the U.S. was no longer an AI laggard.
Alphabet (GOOGL.O) shares, though, surged about 29% in that period, following a strong reception of Google’s latest Gemini 3 model. The company also recently struck a deal to power Apple’s (AAPL.O) revamped Siri.
“Alphabet has the upper hand in the AI race as investors recognize that proprietary ecosystems, such as Apple and Search in Google, are tough to penetrate,” said David Wagner, head of equities at Aptus Capital Advisors, a Big Tech investor.
“Like in the internet boom, the first-mover advantage doesn’t always win the marathon.”
Microsoft and Meta will report earnings on Wednesday, while Alphabet and Amazon report next week.
<h3>AI BUBBLE FEARS REMAIN</h3>
In the October-December quarter, Google Cloud revenue growth likely quickened to 35% from 33.5% in the previous three months, according to LSEG.
Microsoft’s Azure is expected to post a 38.8% rise, slower than the 40% jump it reported in the preceding quarter. Amazon Web Services likely grew 21.1%, up from 20.2% in the prior period.
Still, doubts linger about the real-world benefits for the businesses adopting the technology, feeding into bubble fears that hounded the technology industry for much of last year.
More than half the respondents in a PwC survey of 4,454 CEOs earlier this month said they realized neither revenue nor cost benefits from investments in AI.
“For this not to be a bubble by definition, it requires that the benefits of this are much more evenly spread,” Microsoft CEO Satya Nadella said at Davos.
Morgan Stanley analysts said sentiment toward Microsoft has shifted to “a wall of worry” due to growing competition for Azure and OpenAI, in which the company has a 27% stake.
Microsoft has said it is battling AI capacity constraints which it says are expected to last at least until June. As well, a surge in memory chip prices has dampened the outlook for the PC market, a critical driver for Microsoft’s personal computing business that houses Windows and Xbox consoles.
Overall, its revenue likely rose 15.3% to $80.27 billion in the October-December period, the slowest growth in three quarters.
<h3>GOOGLE GEMINI ADOPTION IN FOCUS</h3>
Alphabet is expected to benefit from rapid AI integration into search and a stable advertising market, with the company expected to report a 15.5% jump in revenue to $111.37 billion.
It also opened up a new revenue stream in October by agreeing to supply Anthropic - an AI startup it backs - with its AI chips called Tensor Processing Units. The deal, worth tens of billions of dollars, is a departure from Alphabet’s strategy of reserving these chips for internal use.
Meta’s efforts to improve ad search and recommendations with AI, meanwhile, are expected to have powered a 20.6% rise in revenue to $58.35 billion. But an expensive hiring spree for top AI talent is expected to slow profit growth to a near three-year low.
Amazon is expected to post a 12.5% rise in revenue, slightly slower than the preceding quarter as growth weakens at its North America retail business.
Big Tech’s big divergence
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Cloud wars heat up as AI drives spending
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Meta Q4 Earnings

Big Tech earnings are under scrutiny as Alphabet leads the AI race with a 29% share surge, driven by strong reception of its Gemini 3 model. Microsoft and Meta face pressure to justify their AI investments, with both companies expected to report earnings soon. Despite a projected 30% increase in AI spending, doubts linger about the tangible benefits of AI, with many CEOs reporting no revenue gains. Microsoft anticipates AI capacity constraints until June, while Alphabet is expected to see a 15.5% revenue increase, bolstered by stable advertising and new AI chip deals.

- Microsoft and Meta are under pressure to justify their AI investments as Alphabet's shares climb following the success of its Gemini 3 model and a deal with Apple.  
- Despite expected increases in AI spending across key tech firms, concerns about achieving tangible benefits from AI technology persist, with many CEOs reporting no revenue or cost improvements.  
- As earnings reports approach, Microsoft faces AI capacity constraints, while Alphabet is expected to benefit from stable ad revenues and rapid AI integration.

PREVIEW-Big Tech earnings to test AI rally as resurgent Alphabet takes lead