Tech Giants Deliver AI-Powered Earnings Growth

Big Tech is on deck this week. Shares of Meta and Microsoft spiked after the duo’s earnings reports topped expectations. So far, it not only seems like tech giants are withstanding tariff turmoil and general macroeconomic drama, but that their multi-billion-dollar investments into AI could be starting to show returns. 

Pressure’s been mounting on tech companies to show the AI juice was worth the very expensive squeeze, especially after Chinese startup DeepSeek shoved the industry toward a more cost-efficient future. 

The DeepSeek Effect

Investors were shaken by DeepSeek’s debut of its advanced AI model in January — which the Chinese startup said it built with just $6 million, a fraction of other tech companies’ budgets. Within days, $1 trillion worth of AI companies’ value went poof  as the world second-guessed how much AI should cost. 

But American companies haven’t backed down, and some recent earnings showed signs their continued investments may pay off:

• Microsoft’s cloud revenue grew 33% annually in the most recent quarter, and the tech company attributed about half of that jump to AI. Last week, Alphabet said its search segment’s first-quarter revenue popped 12% as 1.5 billion people used the AI Overviews that Google generates at the top of search results, up from 1 billion in October.
• Meta said its AI assistant now has 1 billion active monthly users, and while ads make up almost all of Meta’s revenue, AI could boost app engagement (and in turn attract advertisers). It also launched a standalone AI app last week and plans to boost spending on infrastructure including AI to as much as $72 billion this year.

On the other hand, Apple may be late to the party: It has had to delay the rollout of some of its Apple Intelligence features.

Powerful Motivator. While Big Tech has made AI gains, regulators have cracked down on DeepSeek. It’s now banned on government devices in a handful of US states over national security concerns, and officials are investigating whether DeepSeek built its model with smuggled chips that are more advanced than the ones it claimed to use. But while DeepSeek may not be a ChatGPT killer, it seems to have lit a fire under tech giants to prove their AI investments are showing progress.