US Tech Earnings: AI Investments Drive Strong Results for Major Players

Core Insights - The world's largest technology companies reported strong quarterly results, driven by AI capabilities and cloud infrastructure demand [1] - Despite robust operational performance, one-time charges and regulatory fines present challenges for Big Tech [2] Meta Platforms - Meta Platforms achieved a revenue growth of 26% year on year to US$51.2 billion for the quarter ended September 30, 2025, fueled by strong advertising demand [3] - Ad sales reached US$50 billion, with ad impressions increasing by 14% and average price per ad rising by 10% [4] - Net income fell 83% to US$2.7 billion due to a one-time, non-cash tax charge of US$15.9 billion, resulting in diluted EPS of US$1.05; excluding this charge, net income would have been US$18.6 billion with diluted EPS of US$7.25 [4] - Operating profit grew 18% to US$20.5 billion, while free cash flow declined 32% to US$10.6 billion due to higher capital expenditures [4] - Reality Labs reported a loss of US$4.4 billion, attributed to weaker headset sales, but Meta continues to invest heavily in AI and data centers, with full-year capex expected to reach US$72 billion [5] - Meta's balance sheet remains strong with US$44.5 billion in cash and marketable securities against US$28.8 billion in long-term debt; management anticipates 4Q2025 revenue of US$56 to 59 billion [5] Alphabet - Alphabet reported record revenue of US$102.3 billion, up 16% year on year, with net income increasing by 33% to US$35.0 billion and diluted EPS rising by 35% to US$2.87 [6] - Free cash flow grew 39% to US$24.5 billion despite increased capital expenditures; Google Services revenue rose 14% to US$87.1 billion [6][8] - Google Cloud revenue accelerated by 34% to US$15.2 billion, driven by AI infrastructure and generative AI solutions [7] - Operating income reached US$31.2 billion, which included a US$3.5 billion fine from the European Commission; Alphabet declared a quarterly dividend of US$0.21 per share [8] - Management expects 2025 capital expenditures of US$91-93 billion to support growing AI and Cloud customer demand, with a US$155 billion backlog indicating strong future growth potential [8] Microsoft - Microsoft reported a revenue growth of 18% year on year to US$77.7 billion for the first quarter of fiscal 2026 [9] - Operating income surged 24% to US$38.0 billion, with GAAP diluted EPS reaching US$3.72, up 13% year on year [9] - Microsoft Cloud revenue increased by 26%, driven by strong demand for Azure, reflecting growing customer adoption [10] - The company is committed to capturing AI opportunities, with a new OpenAI deal giving Microsoft a 27% stake, enhancing its competitive position in generative AI technologies [11] - Microsoft continues to increase investments in AI across both capital and talent to leverage the massive opportunities from AI-driven transformation [12]