The Fantastic Five Deliver on Earnings

Apple, Amazon, Alphabet, Microsoft, and Meta delivered earnings reports that largely lived up to investors’ expectations last week. Their financial results paint a clear picture: AI is driving earnings growth even amidst record spending levels. While some investors may fear we’re in a ‘build and hope’ cycle, the results and commentary of this earnings season paint a picture of a ‘build while monetize’ cycle.

Accelerating Earnings Growth

These Fantastic Five companies proved to investors that AI initiatives are already driving robust – and accelerating – earnings growth. As shown below, forecasted next twelve months’ income for these five companies now stands at $624 billion, up 27% year over year, which represents the highest expected growth rate since the middle of 2024. That’s an extraordinary level of earnings growth for companies already operating at a massive scale.

Amidst Historic Spending

At the same time, forecasted NTM capital expenditures have surged to $759 billion, up 135% year over year, as shown below. On the surface, that kind of spending spike may raise red flags as capex cycles of this magnitude have led to concerns about overbuild and diminishing returns. However, the executives of these companies provided commentary to explain why this spending may be justified.

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• Microsoft CFO Amy Hood: “Even with these additional investments and efforts to bring capacity online faster, we expect to remain constrained at least through 2026.” ¹
• Amazon CEO Andy Jassy: “We’re just in a stage where there’s just not enough capacity for the amount of demand.”²
• Google CEO Sundar Pichai: “In Google Cloud…our enterprise AI solutions had a 800% year-on-year increase. We are compute-constrained in the near-term…our cloud revenue would have been higher if we were able to meet the demand.”³

Whether it’s cloud workloads, AI model training, or inference at scale, the demand for data centers remains strong, and investors appear to understand and are willing to underwrite this level of spending.

To me, this earnings season provided the clearest proof so far that increased AI-focused investments are already paying off. Across cloud computing, digital advertising, and enterprise software, these Fantastic Five companies showed we may be in a ‘build while monetize’ cycle that is much different than previous ‘build and hope’ technology cycles of the past. So long as these Fantastic Five continue to scale revenue and income, the market may likely remain supportive of historic spending plans.

• https://finance.yahoo.com/quote/MSFT/earnings/MSFT-Q3-2026-earnings_call-547930.html?guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAKAfaPOyLiMOxu_CLk0NWOos04lQLdT3pX4k9pl35G6ROgfl6MuX2xMvPBfXtOWcUw0Vkgo33Zp2hv4Aln0dmpeOqwca1bYzv1YHB-C-AYhWYCPjN-fMRyGkaHUil4eK93iBUSNEiTB4C02aJ-p0qZNXowpMbPGFQhqIJDTDAivK
• https://finance.yahoo.com/quote/AMZN/earnings/AMZN-Q1-2026-earnings_call-552741.html
• https://finance.yahoo.com/quote/GOOG/earnings/GOOG-Q1-2026-earnings_call-551989.html

For more content by Blake Anderson, CFA®, Director, Portfolio Management, click here.

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