Big Tech’s AI Bill Is Due
Remember when everyone was throwing billions at AI like it was going out of style? Well, the bill’s arrived.
This week, Alphabet and Amazon report earnings, and investors want answers: Is all that AI spending actually making money, or just making headlines? After Microsoft’s results triggered a market wobble last week—turns out Wall Street doesn’t love “trust us, it’ll pay off eventually”—the pressure’s on.
Both companies are AI heavyweights, but recent tech stock jitters have shifted the vibe from “look how ambitious we are” to “show us the money.”
Alphabet: Cloud Momentum Meets Regulatory Headwinds
Google’s $4 Trillion Moment
Alphabet reports Wednesday after the bell, fresh off hitting a $4 trillion valuation. Not bad for a company that started as a search engine.
The Google owner recently became the world’s second most valuable company, riding a 2025 rally fuelled by Google Cloud growth and advertising strength. Investors want confirmation that momentum isn’t just hype.
Gemini Goes Everywhere
Alphabet’s pushed its Gemini AI models into Search, Android, Workspace, and Google Cloud. The real kicker? A multi-year deal with Apple to overhaul Siri starting late 2026, giving Gemini access to over two billion devices.
That’s not just growth—it’s diversification away from search revenue dependency.
Cloud’s the Real Engine
Google Cloud ended Q3 with a $155bn backlog, signalling multi-year revenue locked in. Recent growth above 30% has turned sceptics into believers.
Markets are also eyeing Alphabet’s planned $32bn acquisition of cloud security firm Wiz. If regulators approve, it’ll deepen enterprise offerings and strengthen cloud positioning.
The Advertising Question
Search and YouTube ads still drive most of Alphabet’s profit, and so far, they’ve held up despite fears that AI-powered answers might kill clicks.
Any softness here gets extra scrutiny, especially with ongoing antitrust pressure in the US breathing down Google’s neck.
Amazon: AWS Growth Meets Cost-Cutting Reality
30,000 Jobs Gone in Six Months
Amazon reports Thursday, and CEO Andy Jassy isn’t messing about. The company announced 16,000 job cuts last week, bringing total redundancies to roughly 30,000 in six months.
Translation? Pandemic-era bloat is getting axed as Amazon tightens the belt.
AWS Is Still King
Amazon Web Services ended Q3 with a nearly $200bn backlog, whilst revenue growth hit just over 20%—the fastest pace in almost three years.
A $38bn, seven-year deal to supply cloud capacity to OpenAI has cemented AWS as critical AI infrastructure. That’s not just revenue—it’s positioning.
The Profitability Tightrope
Here’s the catch: Markets are getting antsy about how long AI investments take to deliver returns. If spending starts squeezing margins, Amazon’s stock could take a hit.
On the bright side, Amazon’s advertising business—a high-margin gem—is growing fast and should feature prominently in results.
The Bigger Picture: AI’s Reality Check
Together, Alphabet and Amazon’s earnings will test whether Big Tech’s massive AI investments are starting to pay off—or whether we’re still in the “spend first, profit later” phase.
Microsoft already rattled the market with concerns that heavy AI spending is eating into near-term returns. If Alphabet and Amazon can’t show strong cloud growth, healthy margins, and clear paths to profitability, expect more volatility.
The next phase of AI build-out depends on proving it’s not just expensive—it’s worth it.
Wrapping Up
Both companies are betting big on AI, but this week’s earnings will show whether those bets are starting to cash in. Google Cloud’s momentum and AWS’s infrastructure deals look promising, but margins and profitability remain the real test. Follow our coverage for live updates on earnings results and what they mean for your tech investments.
FAQs
Q1: Why are investors so focused on AI spending right now?
A: After Microsoft’s earnings sparked a sell-off last week, markets are nervous that heavy AI investments aren’t delivering near-term returns. Alphabet and Amazon need to prove the spending is paying off, not just piling up.
Q2: What’s the significance of Alphabet’s $4 trillion valuation?
A: Alphabet recently became the world’s second most valuable company, riding strong 2025 momentum. Investors want this week’s earnings to confirm that Google Cloud growth and advertising strength can sustain that valuation.
Q3: How important is AWS to Amazon’s overall business?
A: Extremely. AWS ended Q3 with a nearly $200bn backlog and 20%+ revenue growth—the fastest in almost three years. It’s Amazon’s profit engine and critical to the company’s AI infrastructure positioning.
Q4: What’s the Gemini-Apple deal about?
A: Alphabet struck a multi-year agreement with Apple to use its Gemini AI to overhaul Siri starting late 2026. This gives Gemini access to over two billion active devices and reduces Alphabet’s reliance on search revenue alone.
Q5: Why are Amazon’s job cuts significant?
A: CEO Andy Jassy has cut roughly 30,000 corporate jobs in six months, signalling aggressive cost-cutting to unwind pandemic-era expansion. Markets will watch closely to see if this improves margins without hurting growth.
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Effective Date: 15th July 2025
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