The Big Four's performance diverges after results! Who is the real winner in AI?
Earnings reports of the four major cloud giants released on the same day, how to seize the core opportunities during the AI cloud acceptance phase
Key Speaker: Joe Yu (Yu Shilin) | Head of Research for Futu's Institutional and Private Wealth Team
Jason Huang (Huang Hongchang) | Research Analyst at Futu
Host: Richard | Futu's Institutional and Private Wealth Team
Weekly Market Insights
1 Macroeconomic Review and Market Outlook 00:01:12 ~ 00:06:30
– The Federal Reserve maintained interest rates at 3.5%-3.75% in May, with the largest voting divergence since 1992, reflecting an increased internal bias towards easing; Powell remains on the board, but an early departure could accelerate Trump's reshaping of the Fed framework;
– Rising US-Iran tensions pushed oil prices back above $100, prolonging inflationary pressures; if oil prices continue to rise, the next meeting may signal a rate hike;
– China’s April PMI at 50.3, supported by export-driven expansion; the Politburo meeting emphasized boosting domestic demand and curbing excessive competition, benefiting the robotics and new economy sectors.
Shenzhen significantly eases purchase restrictions, with housing fund interest rates cut to 2.6%, indicating clear policy intentions for stabilization.
Recent selected targets 00:04:48 ~ 00:06:30
Eight out of the top 15 best-selling EVs in Europe use its battery pack, highlighting a prominent electrification barrier;
Revenue guidance for the robotics liquid cooling business has been raised from 100 million to 500 million, opening up growth potential;
Valuation is approximately 13 times PE, transitioning from losses to profit-driven, without yet exhausting growth potential.
In-depth analysis of Q1 2026 earnings reports from the four major AI cloud giants
Revenue exceeded expectations by 3%, operating profit surpassed forecasts by over 10%; normalized EPS (excluding investment income) beat estimates by around 5%;
– Google CloudRevenue of 20 billion USD (+63% YoY), with profit margins expanding to 32.9%;
– Backlog nearly doubledTo $460 billion+, multiple single-quarter orders over $1 billion, with clients expanding to pharmaceutical and research-oriented enterprises;
– Search resilience: Not disrupted, AI instead increases search frequency and ad conversion; 30% of search ad spending already uses AI tools;
- AI commercialization shifts from traffic to paid: Substantial growth in Gemini enterprise-level subscriptions, API token processing volume increased significantly quarter-over-quarter;
- CapEx revised upwards to $180-190 billion, market pricing logic has completely shifted from 'penalty' to 'reward';
- Stock surged over 10% cumulatively in three days post-earnings, institutions unanimously raised target prices (Citi Bull Case at $520).
Google-C (GOOG.US) Google-C (GOOG.US) Google-C (GOOG.US)
- Revenue and adjusted EPS both slightly exceeded expectations across the board, categorized as a Clean Beat;
– AzureGrowth rate of 39% (constant currency), guidance for Q2 reaching 40%, management confirms acceleration in the second half; however, driven by supply release (GPU availability) rather than pure demand surge, market questions sustainability;
- Annualized AI revenue exceeds $37 billion; Copilot paid seats surpass 20 million (net increase of 5 million in a single quarter); GitHub Copilot to transition to usage-based pricing starting June;
- CapEx revised upward to $190 billion (approximately $30 billion above guidance), partly due to hardware price hikes, raising questions about the quality of investments;
– Key Focus: Whether Azure’s growth can be sustained + When will the FCF inflection point be confirmed; Stock price rose initially then fell, as the market is not rejecting performance but waiting for stronger cash flow signals.
Microsoft (MSFT.US) Microsoft (MSFT.US) Microsoft (MSFT.US)
- Total revenue of $56.3 billion (up 33% YoY); Normalized EPS around $7.3 (excluding an $8 billion one-time tax benefit), still beating expectations;
– Core Flaw: DAP $3.56 billion, below the expected $3.62 billion (missed by approximately $60 million), triggering post-market decline;
- Q2 revenue guidance of $58-61 billion meets expectations but offers no surprises; CapEx revised upward to $125-145 billion, mainly due to hardware price increases, interpreted by the market as a passive increase;
- Increasing CapEx while laying off employees (approximately 8,000 people/10%), 'streamlined operations' offset infrastructure investment, and layoffs may expand further;
– Key disadvantage: No direct monetization of AI through cloud services, with a long and indirect ROI path; market tolerance lower than the top three cloud providers; crowded trades require significant outperformance to drive the stock price, and concerns for this quarter have not been alleviated.
Meta Platforms (META.US) Meta Platforms (META.US) Meta Platforms (META.US)
- Total revenue of $181.5 billion (+17% YoY), exceeding expectations by about 2.5%; EPS beat by over 70%;
– AWS: Revenue of $37.6 billion (+28% YoY), the fastest growth rate in 15 quarters;
– BedrockCustomer spending increased 170% QoQ, with the platform processing more tokens than the total from all previous years combined;
- OpenAI models deployed on AWS (after Microsoft relinquished exclusivity rights), collaborating with Anthropic to form a dual top-tier model ecosystem, strengthening platform neutrality;
- Proprietary chips (Trainium/Graviton) are in short supply, with hardware expected to become the second growth driver;
- Indirect benefits: Amid rising hardware costs and limited capacity, enterprises moving to the cloud are more inclined toward leading cloud providers with ample hardware supplies.
– Stock prices fell first and then rose; Amazon's strategy of 'seizing supply first → then capturing the ecosystem → finally reaping profits' gained market approval;This week’s recommended stock pick by the team。
Amazon (AMZN.US) Amazon (AMZN.US) Amazon (AMZN.US)
Summary
Google: AI Shifting pricing from punitive to rewarding, Backlog doubling + Search resilience validates high-quality growth, evolving from the Base Case towards the Bull Case
Microsoft: Cloud acceleration confirmed but the market, awaits FCF inflection points, when better options exist, funds are not in a rush to replenish
Meta: Slow conversion path,CapEx lacks direct return verification, normally requires waiting another quarter
Amazon: Bedrock surge + OpenAI partnership + hardware growth trajectory, strategy increasingly recognized, AI trade prioritized
Q&A session
Q1: Meta's DAP miss but ad revenue beat, how to interpret? 00:36:22 ~ 00:38:30
A (Joe): The core isa structural improvement in monetization efficiency. The platform boosts ad order acceptance and conversion rates through AI-based recommendation rankings and Business AI tools, achieving revenue outperformance even as user growth faces pressure. Similar logic is reflected in gaming promotion companies.
Q2: While advancing Bedrock and partnering with OpenAI, is AWS’s position redefined? 00:38:31 ~ 00:40:35
A (Joe): YesStrengthen rather than weaken. Previously, AWS's concern was the lack of a top-tier self-developed large model. Now, with both OpenAI and Anthropic’s top-tier models integrated, the invocation of leading models and cloud token consumption have received a strong boost. The advantages in computing resources and ecosystem position continue to expand, leaving significant room for imagination regarding subsequent product synergy and billing models.
Q3: Why hasn't Google Search been disrupted by AI search? Why has the narrative shifted so quickly? 00:40:35 ~ 00:45:25
A (Jason): ① The market trend itself changes rapidly (similar to Meta’s cash-burning phase when its stock price still rose); ② Google precisely captures commercially intent-driven searches through AI, extending user retention and improving ad conversion (double-digit increase).Advertisers' positive feedback forms a closed loop. HoweverThe long-term risk of agents replacing search actions has not been disproven, this quarter’s data only significantly lowers the probability of 'being replaced,' whether the trend reverses still needs observation.
Q4: Is Microsoft's weakness due to technical selling pressure from SpaceX IPO cash hoarding? 00:45:26 ~ 00:48:00
A (Jason):More like 'explaining stock prices by looking in the rearview mirror'. The limited funds that each institution needs to allocate globally after SpaceX's $100 billion financing round do not require selling Microsoft to participate.Root cause of weakness: Uncertainty over Azure’s growth timeline + $190 billion CapEx pressure on FCF remains unresolved + The market has better alternatives.If SpaceX is indeed the source of pressure, the pressure will naturally ease after its June IPO.
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
Comments (8)
to post a comment
8
4