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

By Aditya Soni

Jan 27 (Reuters) - Microsoft and Meta volition footwear disconnected Big Tech net this week nether unit to beryllium that their costly bets connected artificial quality tin powerfulness different twelvemonth of beardown maturation arsenic a resurgent Alphabet takes the pb successful the high-stakes ​race.

The companies, on with Amazon, are expected to assistance their AI spending by 30% to much than $500 cardinal this year, an unprecedented outlay ‌that volition sharpen capitalist scrutiny.

Doubts person deepened whether Microsoft has squandered a first-mover vantage successful AI it secured done its OpenAI investment. Meta excessively is connected the hook to amusement payoffs from its ‌expensive propulsion into superintelligence.

Both stocks declined much than 6% successful the past 3 months of 2025, portion Amazon notched a tiny 5.1% summation aft its November woody with OpenAI signaled that the largest cloud-computing supplier successful the U.S. was nary longer an AI laggard.

Alphabet shares, though, surged astir 29% successful that period, pursuing a beardown reception of Google's latest Gemini 3 model. The institution besides precocious struck a woody to powerfulness Apple's revamped Siri.

"Alphabet has the precocious manus successful the AI contention arsenic investors ⁠recognize that proprietary ecosystems, specified arsenic Apple and Search ‌in Google, are pugnacious to penetrate," said David Wagner, caput of equities astatine Aptus Capital Advisors, a Big Tech investor.

"Like successful the net boom, the first-mover vantage doesn't ever triumph the marathon."

Microsoft and Meta volition study net connected Wednesday, portion Alphabet ‍and Amazon study adjacent week.

AI BUBBLE FEARS REMAIN

In the October-December quarter, Google Cloud gross maturation apt quickened to 35% from 33.5% successful the erstwhile 3 months, according to LSEG.

Microsoft's Azure is expected to station a 38.8% rise, slower than the 40% leap it reported successful the preceding quarter. Amazon Web Services apt grew 21.1%, up from 20.2% successful the anterior ​period.

Still, doubts linger astir the real-world benefits for the businesses adopting the technology, feeding into bubble fears that hounded the exertion manufacture for overmuch of ‌last year.

More than fractional the respondents successful a PwC survey of 4,454 CEOs earlier this period said they realized neither gross nor outgo benefits from investments successful AI.

"For this not to beryllium a bubble by definition, it requires that the benefits of this are overmuch much evenly spread," Microsoft CEO Satya Nadella said astatine Davos.

Morgan Stanley analysts said sentiment toward Microsoft has shifted to "a partition of worry" owed to increasing contention for Azure and OpenAI, successful which the institution has a 27% stake.