Microsoft and Meta are set to report Big Tech’s results this week under pressure to prove that high-stakes bets on artificial intelligence can fuel strong growth this year as a resurgent Alphabet leads in a high-stakes race.
The companies, along with Amazon, are expected to increase their AI spending by 30% this year to more than $500 billion, an unprecedented spending spree that will bring increased scrutiny from investors.
There are growing suspicions that Microsoft is wasting the first-mover advantage in AI it secured through its investment in OpenAI. The meta is also about to show the rewards of its expensive foray into superintelligence.
Shares of both companies have fallen more than 6% in the last three months of 2025, but Amazon posted a modest 5.1% gain after its November deal with OpenAI showed the largest U.S. cloud computing provider is no longer an AI laggard.
However, Alphabet stock rose about 29% during this period as Google’s latest model Gemini 3 was well received. The company also recently signed a deal to power Apple’s improved version of Siri.
“Alphabet has an advantage in the AI race because investors recognize that proprietary ecosystems like Apple and Google search are difficult to penetrate,” said David Wagner, head of equities at Big Tech investor Aptus Capital Advisors.
“Just like with the Internet boom, first-mover advantage doesn’t always win the marathon.”
Microsoft and Meta will report earnings on Wednesday, and Alphabet and Amazon will report next week.
Fears of AI bubble remain
Google Cloud’s revenue growth may have accelerated to 35% in the October-December quarter, from 33.5% in the previous three months, according to LSEG.
Microsoft’s Azure is expected to grow 38.8%, slower than the 40% increase reported last quarter. Amazon Web Services could rise 21.1%, up from 20.2% in the prior quarter.
Still, questions remain about the actual benefits for companies adopting the technology, adding to the bubble fears that have dogged the tech industry for much of last year.
In a PwC survey of 4,454 CEOs conducted earlier this month, more than half of respondents said they did not see any revenue or cost benefits from investing in AI.
“For this to not be a bubble by definition, the benefits need to be spread more evenly,” Microsoft CEO Satya Nadella said at Davos.
Analysts at Morgan Stanley said sentiment toward Microsoft has turned into a “wall of fear” as competition for Azure and Open AI, in which the company owns a 27% stake, increases.
Microsoft says it is grappling with constraints on its AI capabilities, which it expects to last until at least June. Similarly, rising memory chip prices have dampened the outlook for the PC market, a key driver for Microsoft’s personal computing business that houses Windows and Xbox consoles.
Overall, sales for the October-December period could rise 15.3% to $80.27 billion, the slowest growth in three quarters.
Pay attention to the adoption of Google GEMINI
Alphabet is expected to benefit from the rapid integration of AI into search and a stable advertising market, with the company’s revenue expected to rise 15.5% to $111.37 billion.
The company also opened up a new revenue stream in October when it agreed to supply AI chips called Tensor Processing Units to Anthropic, an AI startup it backs. The deal, worth tens of billions of dollars, is a departure from Alphabet’s strategy of reserving these chips for internal use.
Meta, meanwhile, is expected to see revenue rise 20.6% to $58.35 billion due to its AI-powered efforts to improve ad search and recommendations. However, profit growth is expected to slow to the lowest level in nearly three years due to expensive recruitment efforts for top AI talent.
Amazon expects sales to rise 12.5%, slightly slower than the previous quarter, as growth in its North American retail business slows.
(Reporting by Aditya Soni in Bengaluru; Editing by Sayantani Ghosh)
