How AI is unlocking expansive growth for the market.

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AI is proving central to the fortunes of big tech, with companies committed to big investments in this growing space.

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With another earnings season now all but done and dusted, it’s time to take stock of what it means for the markets.

If it wasn’t already clear from the record highs, earnings season was well received, and if anything, it reinforced the key thematics giving investors the confidence to support this bull run.

Make no mistake, mega-tech stole the show once again, and the common theme across this cohort centred on the fact that artificial intelligence (AI) remains a dominant structural catalyst.

Not only has this channel opened up the prospect of new revenue streams, but it has also emerged as an amplifying force to supercharge existing revenue streams.

Meanwhile, right across the board, companies are sensing these opportunities as demand accumulates, and responding by allocating unprecedented capital expenditure towards this category.

With all that said and done, these were the key takeaways from mega-tech earnings.

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Alphabet boosts capex outlook amid AI surge


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Kicking off proceedings, Alphabet (GOOGL) set the tone with standout results that exceeded the most optimistic of forecasts.

In total, the tech conglomerate reported 14% revenue growth versus the prior comparable period, totalling US$96.4 billion in the second quarter.

While many expected the economic landscape to act as a headwind for the company’s Search advertising division, that proved to be unfounded.

Nevertheless, it was the long-heralded Cloud division that put in the hard yards, with quarterly revenue from this segment surging 32% to US$13.6 billion.

Many had written off Alphabet’s growth as having likely peaked, but as it turns out, Cloud growth moved forward at its fastest rate since the third quarter of 2024.

In keeping with the AI fanfare, strong demand for AI infrastructure and core products such as Gemini proved instrumental to this result. We’ve seen generative AI deployed throughout the company’s product suite, which is also boosting engagement across Search and YouTube.

Now anticipating US$85 billion in capex for 2025 - an increase of US$10 billion - it is clear that Alphabet sees itself stepping into an AI leadership position to sustain strong growth over the coming years.

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Microsoft Azure growth accelerates

Next up, Microsoft (MSFT) set the bar high by its own standards, relishing in its role as an AI flagbearer. During its fiscal fourth quarter, MSFT grew revenue 18% to US$76.4 billion, and over the full year, revenue rose 15% to US$281.7 billion.

Unsurprisingly, Microsoft’s Cloud segment, most notably Azure, supported this growth. The Azure segment grew revenue 39% over the year, with AI tools being implemented across Microsoft 365 and enterprise AI adoption picking up steam.

Over previous quarters, Microsoft’s Azure and other cloud services revenue was growing in the range of 33-35%. While impressive, that rate accelerated across the most recent quarter, and it boils down to new AI deployments, legacy migrations, and the like.

Accelerating AI momentum and market share gains in the Cloud segment see Microsoft poised to continue investing heavily in pursuit of growth.

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Meta harnesses a rebound in advertising

Not to be outdone, Meta Platforms (META) was also sharing the stage with Microsoft at the end of the month, however, it managed to shine brightly on account of its own resilient performance.

Notching up its 10th consecutive revenue beat, the social media giant grew the top line by an impressive 22%. This included a near identical growth rate in its Advertising segment, where like other companies already mentioned, AI has been deployed to boost engagement.

At the same time, more broadly, Meta has witnessed a recovery in e-commerce ads, gone toe-to-toe with rival TikTok for engagement courtesy of its Reels product, and deployed AI upgrades to leverage more tailored outcomes for users.

Speaking of which, across its Family of Apps, Meta recorded user growth, with daily active users surpassing 3.3 billion.

Looking forward, while Meta expects revenue in the coming quarter to fall in the range of 18-20% growth, it also offered strong clues about its own future AI capex plans.

On that point, capex has been hiked slightly for 2025, but next year it is expected to yield bigger increases specifically for AI capabilities that will underpin medium to long-term growth.

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Amazon turns around its Web Services growth

Amazon’s (AMZN) resilience was on show when it announced a strong set of results that also happened to top estimates.

During the second fiscal quarter, the company reported a 13% increase in revenue to US$167.7 billion, buoyed by strong e-commerce and advertising results.

The company’s key growth driver, Amazon Web Services, recorded an 18% increase in revenue, which totalled US$30.9 billion.

After a period of slowing growth, this marked an acceleration compared with prior quarters. It comes as little surprise on account of surging AI demand for its services like Amazon Bedrock and SageMaker, which represent foundations for all things related to optimising models, or even building and deploying machine learning models.

On the retail front, Amazon’s performance also improved, largely thanks to ad revenue courtesy of Prime, and international margin growth. AWS is expected to keep growing thanks to the uptake of AI.

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Apple looks to iPhone recovery, Services for growth

Last but not least, Apple also managed to deliver in spades after a testing period for the business. It grew revenue 10% to US$94 billion in the third fiscal quarter, its fastest growth since December 2021.

Key to this turnaround was a 13% increase in iPhone sales. The channel benefitted from demand in emerging markets, as well as the redeployment of AI services.

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Meanwhile, Apple’s Services category achieved a number of records, including subscriptions and App store growth. Again, AI has played a pivotal role here, with the company’s ecosystem effectively becoming more ‘sticky’ as a result.

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Although revenue growth is probably likely to moderate from here, Apple proved it shouldn’t be written off despite challenges in markets like China, and trade tariff angst.

Some might also question Apple’s AI commitments, but the company has shown it is embracing this theme, just in a different way than its peers.