Wednesday's after-hours trading delivered a split verdict for the biggest names in artificial intelligence. Alphabet shares climbed more than 3% as Google Cloud revenue surged 63% to $20 billion, its fastest growth since the company began breaking out those figures in 2020. Meanwhile, Meta Platforms dropped over 6%, Amazon slipped, and Microsoft declined, as investors balanced solid cloud demand against rising capital expenditure forecasts for AI infrastructure.
The four hyperscalers—Microsoft, Alphabet, Amazon, and Meta—collectively represent roughly 17% of the S&P 500, with a combined market capitalization exceeding $10 trillion. Their investment decisions directly influence suppliers such as Nvidia, AMD, and Broadcom. This year, the group is expected to spend more than $600 billion on data centers and AI hardware, a figure that has drawn both optimism and skepticism from analysts.
Alphabet's results were the most straightforward of the group. The Google parent company beat analyst expectations, with Google Cloud revenue jumping to $20 billion and its cloud backlog nearly doubling from the prior quarter to over $460 billion. CEO Sundar Pichai described AI as a catalyst that is "lighting up every part" of the company, reinforcing the narrative that cloud growth is being driven by corporate AI demand.
Meta took a different tack, raising its 2026 capital expenditure forecast to a range of $125 billion to $145 billion, up from $115 billion to $135 billion. The company cited heavier AI infrastructure costs, even as it faces potential layoffs and legal challenges in the U.S. and Europe. Meta flagged that youth-related lawsuits "may ultimately result in a material loss," adding another layer of uncertainty for shareholders who had already digested better-than-expected first-quarter revenue.
Amazon's AWS unit posted revenue of $37.6 billion, a 28% increase that topped analyst expectations of 25.1% growth. However, shares slipped after Amazon issued an operating-income outlook that left room for downside, and because Alphabet's even stronger cloud growth stole some of the spotlight. "The standout story," said Jesse Cohen, senior analyst at Investing.com, of AWS's sales pickup, but D.A. Davidson's Gil Luria noted that Google Cloud's faster clip could be a letdown for AWS investors.
Microsoft took a more cautious tone, with Azure cloud revenue climbing 40% for the January-March period, matching consensus estimates. That result may help ease concerns about slower Copilot 365 adoption or shifts in Microsoft's OpenAI partnership. Microsoft has brought Anthropic's models into its cloud offerings, but the updated OpenAI agreement strips away its exclusive rights to resell OpenAI products via Azure, signaling a more complex competitive landscape.
Semiconductor stocks are still riding AI demand, but expectations are high. KLA Corporation forecast fourth-quarter revenue above estimates on strength from AI chip tools, yet its shares dropped almost 9% after hours. "Investors are coming down hard on anything less than massive beats," said CFRA's Brooks Idlet. The broader chip sector, as measured by the Philadelphia Semiconductor Index, rose 2.4% during regular trading, reflecting continued appetite for processors, memory, and networking hardware.
One key risk is that a single weak spot in the AI funding pipeline could trigger a broader pullback. AI-related stocks took a hit earlier in the week after a Wall Street Journal report highlighted missed user and revenue targets at OpenAI, raising doubts about its ability to deliver on future computing deals. Shares of Oracle, CoreWeave, and Arm all slipped. Todd Schoenberger, CIO at CrossCheck Management, noted that sharp drops in established AI names tend to rattle the entire sector, even if the justification is not strong.
Despite the mixed market reaction, the spending surge is having real-world effects. Orders for U.S. core capital goods—a proxy for business equipment investment—jumped 3.3% in March, the largest increase since June 2020, driven by AI spending and data-center construction. However, valuation headwinds from interest rate hikes, rising oil prices, and higher capital costs persist, keeping investors cautious. At this point, the market is looking beyond mere announcements of AI spending and demanding proof of which companies are actually collecting the revenue.
