Big Tech earnings showed AI spending faces a new test as investors weigh returns, cloud growth, and chip costs.

  • Apple shares dropped 7% last week after the company issued a softer sales outlook, with investors concerned about rising memory chip expenses. 
  • Amazon and Microsoft posted strong results driven by rising demand for cloud computing and AI services. 
  • Meta shares fell over 6% as investors questioned its AI spending plans. 

Big Tech earnings last week highlighted a widening divide in the artificial intelligence race, with investors focusing less on the size of AI investments and more on whether those spending commitments are translating into measurable returns. Major technology companies reported strong results, raised infrastructure plans and provided new insights into the growing demand for AI computing power, cloud services and advanced semiconductors. 

Apple Faces Rising Memory Costs

Apple’s stock fell 7% during the week, after the company gave a weaker-than-expected sales outlook, with investors worried about slower growth in the September quarter. Apple expects revenue to rise 9%-11%, below Wall Street’s forecast of about 12% growth. 

Apple is facing higher costs and supply challenges due to a sharp increase in memory chip prices. CEO Tim Cook said the surge in DRAM costs, fueled by rising demand from AI infrastructure, has created a "100-year flood on memory pricing," and added pressure to the company’s margins. 

Despite the cautious forecast, Apple reported strong third-quarter results. Revenue climbed 16% to $109.4 billion. iPhone sales rose 21%, and Mac sales increased nearly 30%, helped by demand for the new MacBook Neo. On Stocktwits, retail sentiment around the stock remained in ‘bullish’ territory. 

Cloud Giants Increase AI Spending

Amazon.com (AMZN) delivered a strong second-quarter performance, helped by booming demand for cloud computing and AI infrastructure. Amazon Web Services (AWS) revenue jumped 37% to $42.2 billion.

The company raised its 2026 capital spending forecast by $20 billion to $220 billion as it invests in new data centers and AI capacity. CEO Andy Jassy said demand remains so strong that Amazon expects capacity constraints to continue into 2026 and potentially beyond.

Microsoft’s (MSFT) strong fourth-quarter performance was driven by continued growth in cloud computing and AI services. Revenue increased 18% to $90 billion, while Azure growth jumped 43%, with CEO Satya Nadella saying the cloud business surpassed $100 billion in annual revenue for fiscal 2026. The company also provided a stronger-than-expected outlook for the next quarter, projecting continued Azure growth.

AMZN and MSFT stocks surged 17% and 21%, respectively, over the week. Retail sentiment around both remained at an ‘extremely bullish’ level. 

Meta’s AI Spending Strategy Raises Investor Concerns 

Meta Platforms (META) stock clocked over a 6% weekly decline, marking a third straight week of loss as it faced investor concerns over its AI spending strategy and slower-than-expected outlook despite strong second-quarter results.

CEO Mark Zuckerberg said Meta is exploring ways to monetize its massive AI infrastructure investments by potentially selling computing capacity to outside customers. Investors were disappointed by the unclear timeline for Meta’s potential cloud business, with some expecting a faster move into the market. Retail sentiment around the stock remained in ‘bullish’ territory. 

Tesla’s China Strategy Draws Attention Amid SpaceX Merger Speculation 

Tesla (TSLA) came into focus after CEO Elon Musk rejected reports that the company was preparing to separate its China operations ahead of a potential merger with SpaceX. Musk called the report “absurdly fake news,” while saying such a move had never been discussed.

The report had suggested Tesla advisers were considering options including a spinoff, sale or shutdown of the China business as a way to reduce geopolitical risks. A separation could also address concerns around SpaceX’s defense contracts and Tesla’s operations in China.

Tesla stock recorded a 0.6% weekly dip, with sentiment around the stock remaining in ‘bearish’ territory. 

So far this year, AAPL and AMZN stocks have gained 13% and 17% respectively, while MSFT, META and TSLA declined between 3% and 30%. 

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