Meta Platforms Inc and Amazon both reported first-quarter results that exceeded Wall Street expectations, highlighting robust earnings and revenue growth driven by their respective technology and AI initiatives [1][2][3]. Meta posted earnings of $26.77 billion, or $10.44 per share, up about 61% from $16.64 billion, or $6.43 per share, a year earlier. Revenue rose 33% to $56.31 billion, surpassing analyst estimates of $55.6 billion [1]. Amazon reported earnings of $30.3 billion, or $2.78 per share, compared to $17.1 billion, or $1.59 per share, last year. Net sales increased 17% to $181.5 billion, beating expectations of $177.28 billion [2]. Amazon Web Services revenue reached $37.58 billion, outpacing analyst forecasts of $36.6 billion [2].
Meta raised its capital expenditure forecast for 2026 to $125 billion-$145 billion, up from $115 billion-$135 billion, citing higher component pricing and additional data center costs. This increase is largely attributed to investments in Meta Superintelligence Labs and AI infrastructure, including hiring highly paid AI experts and laying off about 8,000 workers (10% of its workforce) [1]. Meta ended March with nearly 78,000 employees, up 1% year over year [1]. Amazon, meanwhile, reported a 28% growth in its cloud computing unit, the fastest in 15 quarters, and expects net sales for the current quarter to be between $194 billion and $199 billion, representing a 16%-19% increase from the year-ago quarter [2].
Despite beating official forecasts, investor reactions were mixed. Meta's stock price fell more than 6% in extended trading after the results, as the company projected flat revenue growth for the second quarter, with guidance between $58 billion and $61 billion compared to analyst estimates of $59.48 billion [1][3]. Amazon's shares declined about 3% following its earnings release, despite strong cloud growth and a bullish sales outlook [3]. According to [3], investors' sky-high expectations for AI-driven growth were not fully met, leading to subdued enthusiasm for Meta and Amazon, while Alphabet's results were received more positively.
Market analysts noted that the heavy concentration of tech leaders in the S&P 500, particularly the "Magnificent 7" (Apple, Microsoft, Alphabet, Amazon, Meta, Nvidia, Tesla), means that any disappointment in tech earnings can significantly impact the broader market [3]. Chris Brigati of SWBC emphasized that delivering tangible results from elevated capital expenditures remains the critical test for these companies, as valuations leave little margin for error [3].
CONCLUSION
Meta and Amazon delivered strong earnings and revenue growth, beating analyst expectations, but investor sentiment was tempered by concerns over flat revenue guidance and increased capital spending on AI infrastructure. The mixed market reaction underscores the high expectations placed on tech leaders and the importance of translating AI investments into tangible results. The S&P 500's reliance on these companies amplifies the impact of their performance on overall market direction.