Big Tech’s Q1 2025 earnings: Do they confirm fears of a pullback in AI spending?

Meta

Meta stock climbed 4.2 per cent in extended trading on Wednesday, April 30, after the company reported financial results for Q1 FY2025.

The company’s capex for the quarter ended March 31, was $13.69 billion, down from $14.84 billion from the previous quarter. However, Meta increased its projected capital expenses for 2025 to between $64-$72 billion. Initially, the company had said it plans to spend as much as $65 billion this year.

The increase to the capex forecast reflects Meta’s decision to rapidly prepare data centre capacity to support its AI efforts. The potential impact of tariffs on the cost of hardware exports is also a factor, according to Susan Li, Meta’s chief financial officer.

The increased outlays could help allay concerns among investors about waning interest in AI. These concerns had emerged in March this year, after analysts had pointed out that big tech companies like Microsoft might be holding back on investing in new data centres.

“The pace of progress across the industry and the opportunities ahead for us are staggering. I want to make sure that we’re working aggressively and efficiently, and I also want to make sure that we are building out the leading infrastructure and teams,” Meta CEO Mark Zuckerberg told investors on the earnings call.

He also revealed that nearly one billion people are using Meta’s AI assistant on a daily basis. The company had reported 700 million monthly Meta AI users in January. It also launched a standalone Meta AI app earlier this week.

Stating that AI tools helped boost the company’s advertising revenue this quarter, Meta said it is further planning to use AI for targeted ads and social media recommendations. Beating analyst estimates, Meta reported revenue of $42.31 billion for the first quarter of 2025 and profit of $6.43 per share.

Microsoft

Microsoft stock rallied 7.6 per cent in after-hours trading on Wednesday, April 30, after the tech giant reported its financial results for Q3 FY2025.

Microsoft reported spending $21.4 billion on capex in the first three months of 2025, down more than $1 billion from the previous quarter. This is the first time after ten consecutive quarters that the tech giant did not report an increase in AI-driven spending.

The pullback suggests that the company may be starting to apply more discipline to its AI spending. Microsoft further projected spending more than $85 billion on capex in its current fiscal year ending in June.

On the earnings call with investors, Microsoft CEO Satya Nadella said that the demand for its cloud and AI offerings remained strong. “Cloud and AI are the essential inputs for every business to expand output, reduce costs and accelerate growth,” he said.

In February, investment bank TD Securities claimed that Microsoft had pulled out of some contracts for data centres that came under its partnership with OpenAI. This report had triggered concerns among investors of a slowdown in AI infrastructure spending post-DeepSeek.

In response, Nadella said on Wednesday, “The reality is we’ve always been making adjustments to build, lease, what pace we build all through the last whatever, ten, fifteen years. It’s just that you all pay a lot more attention to what we do quarter over quarter nowadays. Having said that, the key thing for us is to have our build and lease be positioned for what is the workload growth of the future.”

“I need power in specific places so that we can either lease or build at the pace at which we want,” he added.

The software giant said that strength in its cloud computing and AI businesses drove its sales past $70 billion, up 13 per cent from the same period a year earlier. Microsoft reported its revenue rose by 13 per cent from the year-ago period to $70.1 billion this quarter. It posted profits of $25.8 billion, up by 18 per cent from the corresponding period of last fiscal year.

Apple

Apple shares fell as much as four per cent in extended trading after the iPhone-maker reported its second fiscal-quarter earnings on Thursday, May 1.

During the quarter, Apple said it was delaying the roll out of key AI features first announced at the company’s developer conference last year. It said that AI improvements to its voice assistant Siri have been delayed to 2026.

“We need more time to complete our work on these features so they meet our high quality bar,” Apple CEO Tim Cook said on an earnings call with analysts.

Apple said it expected to take a $900-million hit to its costs for the current quarter as a result of the trade war between the US and China — assuming that no new tariffs are imposed or other such major changes take place.

“We will manage the company the way we always have with thoughtful and deliberate decisions, with a focus on investing for the long term and with dedication to innovation and the possibilities it creates. As we look ahead, we remain confident,” Cook said on the call.

He confirmed reports that 50 per cent of iPhones sold in the US are being imported from India, and most of its other products for the US are coming from Vietnam. These countries face lower tariffs as compared to China. However, Cook said that the “vast majority” of Apple products for other countries are still manufactured in China.

The company posted quarterly revenue of $95.4 billion, up 5 per cent year-over-year, and $24.78 billion in quarterly profit, a four per cent increase from a year ago.

Google

Google parent Alphabet’s stock rose by 1.7 per cent after it reported results for the first quarter of 2025 on Friday, April 24.

The tech giant said it spent $17.20 billion in capital expenditures in the quarter, a 43 per cent jump from the same period a year earlier. It also reaffirmed its $75 billion outlay for the year, indicating that it will be ramping up capex spending to boost AI infrastructure this year.

Alphabet’s results also showed returns in Google’s crucial ad business, downplaying any impact from global economic uncertainty and reassuring tech investors anxious about its investments in AI.

Google’s core ad business accounted for 75 per cent of its total revenue of $90.23 billion. It saw an 8.5 per cent increase to $66.89 billion in the quarter, beating analyst estimates of a 7.7 per cent rise.

During the earnings call with investors, Alphabet said that it was too soon to calculate the total impact of tariffs on its ads business.

“The changes to de minimis exemption will obviously cause a slight headwind to our ads business in 2025, primarily from APAC (Asia Pacific)-based retailers,” Google’s business chief, Philipp Schindler, said, referring to US President Donald Trump’s decision to end a trade rule that allowed items worth up to $5 to enter the US from China and Hong Kong free of duties.

“We continued to see healthy growth and momentum across the business, including AI powering new features. In Search, we saw continued double digit revenue growth. AI Overviews is going very well with over 1.5 billion users per month, and we’re excited by the early positive reaction to AI Mode. There’s a lot more to come,” Google CEO Sundar Pichai said in a statement.

The search giant posted earnings of $90.23 billion in revenue, a 12 per cent increase year-over-year (YoY). Alphabet reported a profit of $2.81 per share for the January-March quarter. These results were reported at a time when Google is facing threats of a breakup of its core search and advertising businesses after losing two antitrust cases in the US.

Amazon

Amazon’s shares fell more than two per cent in after-hours trading after the company announced its financial results for the first quarter of 2025 on Thursday, May 1.

In the first fiscal quarter, Amazon reported that it spent more than $24 billion in capex, higher than the $14.92 billion spent in the same period in 2024. Most of the capex spending went towards the expansion of infrastructure for Amazon Web Services (AWS), its cloud computing arm. Companies are increasingly relying on AWS for agentic AI services.

“Before this generation of AI, we thought AWS had the chance to ultimately be a multihundred-billion dollar revenue run rate business. We now think it could be even larger,” Amazon CEO Andy Jassy said on Thursday’s call with investors.

“If you believe your mission is to make customers’ lives easier and better every day, and you believe that every customer experience will be reinvented with AI, you’re going to invest very aggressively in AI, and that’s what we’re doing,” he further said.

“You can see that in the thousand-plus AI applications we’re building across Amazon…. and you can see that in the building blocks AWS is constructing for external and internal builders to build their own AI solutions,” he added.

Amazon reported strong AWS sales growth of $29.3 billion, up from 17 per cent, during the fiscal first quarter. Jassy also said that Amazon would do everything it could to keep prices low amid the US-China trade war.

“When there are uncertain environments, customers tend to choose the provider they trust most. Given our really broad selection, low pricing, and speedy delivery, we have emerged from these uncertain eras with more relative market segment share than we started, and better set up for the future,” he said.

The company posted a nine per cent increase in revenue to $155.7 billion, up from $143.3 billion from the year-ago period. It reported net profit of $17.13 billion, up from $10.43 billion in Q1 of 2024.