Live Broadcast Preview | Earnings week for tech giants is here, how to read the earnings reports of AI cloud companies?

The financial reports of the four major cloud giants were released on the same day. How to seize the core opportunities during the AI cloud acceptance period?

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Next Monday at 16:30 Futu's senior investment research expert will take you through the week's market highlights and provide in-depth analysis:Opportunities and challenges behind AI cloud provider earnings reports.

A brief review of the four major AI cloud giants' earnings reports:

$Meta Platforms (META.US)$ | Profit beats expectations, but user metrics and guidance show some flaws

Revenue increased by 33% year-on-year, surpassing market expectations and nearing the upper end of the guidance range;Net profit increased by 61% year-on-year, normalized EPS was approximately $7.31, significantly higher than the expected $6.66. The outperformance primarily came from the Family of Apps: revenue of $55.9 billion (+33%), advertising revenue of $55 billion (+33%),FoA operating margin reached 48.1%, significantly stronger than sell-side forecasts of 43.5%-44.1%.

There were two blemishes:① FoA daily active users were 3.56 billion, below expectations of 3.61-3.62 billion; ② Q2 revenue guidance of $58-61 billion merely met expectations, failing to exceed them, with full-year CapEx revised upward from $115-135 billion to $125-145 billion.

Post-market decline logic:The upward revision of CapEx reignited concerns over free cash flow and ROI; user metrics were slightly below expectations; Q2 guidance offered no surprises. Before the earnings report, Meta’s positioning had become relatively crowded, requiring a significant beat to boost share prices, and minor flaws were magnified as a result.

From a neutral perspective, assuming macroeconomic conditions and advertising demand do not weaken significantly, Meta still has room for upward revisions,The market is just temporarily unwilling to pay a premium for AI returns that have yet to materialize.

$Amazon (AMZN.US)$ | AWS accelerates to new highs, with CapEx and free cash flow being the biggest points of contention

Total revenue increased by 17% year-over-year, exceeding expectations by approximately 2.4%; EPS beat consensus estimates by around 70%;AWS revenue grew by 28% year-over-year, marking the fastest growth in 15 quarters, with AI-driven cloud demand now materially entering the revenue realization phase.The midpoint of Q2 revenue guidance is 196.5 billion, about 4% higher than market expectations.

The core of the outperformance comes from AWS and Q2 guidance:

① AWS growth has reaccelerated, with management confirming that strong trends have continued into Q2, with no significant slowdowns in AWS, advertising, or retail;

② Q2 operating profit guidance is 20-24 billion, with the midpoint slightly below consensus, reflecting the company's continued heavy investment in AI infrastructure, the Kuiper satellite network, and other areas.

③ Also worth noting: The company assumes Prime Day will be held in Q2 this year, compared to Q3 last year, which will significantly boost Q2's year-over-year performance.

There are two points of controversy:

① Q1 capex of 43.2-44.2 billion was significantly higher than expected;

② TTM free cash flow was only 1.23 billion, a 95% plunge from 25.9 billion in the same period last year.

Shares initially fell 4% after-hours before turning around to rise 5%: Early market focus was on the sharp rise in capex and the drastic drop in free cash flow; after the earnings call, Andy Jassy repeatedly emphasized that most of the capex would be monetized over several years, with Trainium potentially saving tens of billions annually in capital expenditures and offering hundreds of basis points of margin advantage, causing the stock to reverse losses and turn positive.

We believeThe market has not rejected Amazon's strategy of 'first capturing supply, then seizing the ecosystem, and finally reaping profits.' The rebound indicates recognition of this logic but demands stronger subsequent validation of execution.

$Alphabet-C (GOOG.US)$ | Search + cloud dual drivers, this earnings season has gained the most market approval

Revenue increased by 22% year-over-year, exceeding expectations by approximately 2.5%;Operating profit increased by 30% year-over-year，Operating profit margin at 36.1%, surpassing expectations by about +9.7%. Amidst heated discussions on the impact of generative AI, search still achieved a +19% growth. AI did not erode the core business but instead enhanced usage frequency and ad relevance.

The core of the outperformance comes from the synergy between search and cloud:

① Google Cloud’s backlog/RPO reached approximately $462 billion, nearly doubling quarter-over-quarter;

② Full-year CapEx was slightly raised to $180-190 billion (previous guidance: $175-185 billion), which the market interpreted as a positive signal of production expansion following demand confirmation, rather than cost overruns.

Two key incremental pieces of information worth focusing on:

① Google Cloud has started delivering TPU hardware that can be deployed in enterprise customers' own data centers. A small portion of revenue will be recognized later this year, with the majority expected to be realized in 2027, opening a new growth curve for revenue and enhancing product differentiation for the cloud business.

② The total number of paid subscribers reached 350 million, with YouTube Premium Lite now covering 23 countries, and set to expand to more than 12 additional countries in Q2.

Shares rose approximately 6%-7% in after-hours trading, with abundant information from the earnings call: AI Mode/AI Overviews are increasing search frequency and ad relevance. The integration of Wiz strengthens enterprise security. Multiple growth areas in subscriptions and cloud services indicate that the core market trading logic is that returns on AI investments have begun to materialize.

We believe the dual drivers of search and cloud have a clear growth logic, and the increase in CapEx has been well-received by the market.The core debate has shifted from 'Will AI disrupt search?' to 'How quickly will the returns on AI investments be realized.'Therefore, Alphabet deserves a higher premium above its historical valuation.

$Microsoft (MSFT.US)$ | Azure's high growth visibility remains strong, but CapEx expectations management appears slightly inconsistent.

Fiscal Year 2026, Third QuarterRevenue increased by 18% YoY., exceeding expectations by approximately 1.8%;Non-GAAP EPS increased 23% year-over-year, surpassing forecasts by about 5%;Azure grew 40%, slightly above the expected 38.2%; AI ARR exceeded 37 billion, growing 123% year-over-year, with AI demand substantially translating into scaled revenue. The midpoint of Q4 revenue guidance is 87.2 billion, which is approximately 2% higher than market expectations.

The core of the outperformance comes from three areas:

① Azure maintained a 40% growth rate on a high base, and management provided an outlook for Q4 to maintain a mild acceleration between 39%-40%. The CFO explicitly stated 'demand is broad and consistently outpacing supply';

② Commercial RPO increased 99% year-over-year to 627 billion, with the portion recognizable within the next 12 months up 39% year-over-year, and the portion beyond 12 months increasing 138%, providing strong visibility for revenue growth in the coming years;

③ M365 Copilot paid seats surpassed 20 million, with net new additions up 250% year-over-year, marking the fastest growth since product launch, with large customers accelerating expansion; GitHub Copilot will transition to a 'seat + usage' pricing model starting June 1, leading the upgrade of AI business models initially in the programming field.

There are two points of contention:

① CapEx at 31.9 billion (up 49% year-over-year), Q4 guidance exceeds 40 billion, CY2026 around 190 billion. Although this quarter was below the consensus expectation of 34.8 billion, the market expectations split before and after the earnings call due to a front-loaded but later higher rhythm.

② The operating profit margin for intelligent cloud decreased by approximately 1.8 percentage points year-over-year. Whether short-term cost pressures can gradually ease with increasing capacity still needs to be verified over the next few quarters.

After-hours slight increase logic:The stock price had already corrected before the earnings report, with low expectations. Several metrics were delivered this time, but did not exceed expectations across the board. Market consensus remains that Microsoft is still the preferred choice among large-cap AI stocks, with disagreement focusing on when high investment will translate into sustainable free cash flow growth.

Comprehensive judgment: All four major cloud manufacturers have validated AI demandTransitioned from 'expectation narrative' to the 'revenue realization' phase. The current market disagreement is not about the authenticity of demand, but rather when high CapEx will convert into sustainable free cash flow?

Monday at 16:30 Senior investment research experts will continue to provide in-depth analysis for you. Welcome to reserve a spot for the live broadcast, and we look forward to interacting with you in the live stream!

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