Alphabet and Meta gave investors a split-screen view of the artificial intelligence boom on Wednesday, with one showing concrete demand and the other asking the market to keep funding the bet.
Alphabet said its cloud computing unit produced $20 billion in sales last quarter, topping the $18.4 billion projection, while the backlog for future business nearly doubled from the prior quarter to more than $460 billion. Google said the cloud unit saw a meaningful acceleration in growth, driven by demand for its AI software and infrastructure, and the quarter was the strongest yet for Google's consumer AI services, including the Gemini app. Shares of Alphabet rose 6.6% in late trading after the report.
Meta moved in the other direction. The company raised full-year capital expenditures to as much as $145 billion, added another $10 billion to its budget and saw its shares tumble more than 6% after the report. Meta does not sell cloud computing services, and its consumer AI app has been slower to take off, leaving investors with fewer numbers to point to as proof that the spending is working.
Alphabet, Meta, Amazon and Microsoft all reported earnings within a span of two minutes on Wednesday, a burst of results that underscored how central the four companies have become to the race to build AI infrastructure. Together, they are the largest spenders on AI data farms, and their outlays are part of a build-out that could cost trillions of dollars. Analysts and investors are watching for evidence that the spending is producing tangible returns, not just bigger budgets.
Sundar Pichai said Alphabet's AI models have great momentum and said the company is bringing helpful AI into the hands of billions of people every day through its products and platforms. Mark Zuckerberg said Meta does not have a very precise plan for how each AI product will be cultivated, adding that he thinks the company has a sense of the shape of where things need to be, while conceding that some of his answers might be unfulfilling. The latest numbers suggest Alphabet has a cleaner line to revenue from AI than Meta does, even as both companies keep raising the stakes. The quartet's total estimated spending could reach as much as $725 billion for 2026, and the next round of earnings will test whether that scale is beginning to pay off.