Episode summary
Dylan Jovine | The Mag 7 Super Bowl is Here!
Summary
Dylan Jovine says the latest Mag 7 earnings were like a Super Bowl for Big Tech, but the real story is not just headline strength; it is a growing split between companies that sell AI infrastructure and companies trying to turn AI into consumer profit. He points to Google, Amazon, Microsoft, and Meta all posting strong results, with cloud businesses and server capacity driving much of the upside.
He argues that AWS, Azure, and Google Cloud are benefiting because businesses are racing to adopt AI and need computing power, storage, data, and electricity. By contrast, consumer-facing tech is drawing more skepticism. Microsoft’s stock reaction reflected worries about the consumer side of the business, while Meta’s stock fell harder because investors are questioning the return on its huge spending plans.
Jovine says Meta’s core business is still very strong, with AI boosting engagement and ad revenue, but capital spending of $125 to 145 billion is pressuring free cash flow and leaving Wall Street asking what the end game is. He sees a tale of two strategies: the “picks and shovels” AI providers are winning, while Meta and parts of Microsoft are still proving how the investment will pay off.
Key takeaways
- Dylan Jovine says the strongest AI trade is in infrastructure sellers like AWS, Azure, and Google Cloud, not consumer apps.
- He notes Amazon’s capital expenditures were 43 billion in the quarter and could reach 160 billion for the year.
- He says Meta’s revenue rose 33%, but net income only rose 16%, while capex is expected at 125 to 145 billion dollars.
- Jovine argues Meta’s stock is being held down by investor doubts over return on investment and the company’s long-term AI end game.
- He remains long the Mag 7 names he discussed and thinks Meta could rerate sharply if spending moderates.
Notable quotes
“This week was like the Super Bowl for Mag 7 earnings, specifically Wednesday night”
“Companies that actually serve corporate clients for their AI efforts, Amazon, AWS, Microsoft, Azure, Google, they're starting to really do well”
“what do these numbers tell us? For starters, they tell us that we're starting to see a split here”
“Meta, again, killer numbers, too. Revenue up 33%. That's unbelievable, really”
“The question really is for investors, what Meta does with this big investment. What is the end game for Meta”
How the episode opens
Good morning. This is Dylan Jovineaux behind the market. Happy Friday.
Today is Friday, May 1st. TGIF. This week was like the Super Bowl for Mag 7 earnings, specifically Wednesday night.
And there's the story that everybody's reading, and then there's what's happening behind the markets, so to speak. And it's really interesting and pretty teasing out what this looks like and where it's going. Three of those companies, Google, Amazon, and Meta, Google, Microsoft, and Meta are in our model portfolio.
I thought I'd talk about them and basically discuss Amazon as well. So, let me get into it here. First, let me talk about Google.
Google Alphabet came out capital spending billion in 2026, while expecting 2027 to rise significantly. Stock was up yesterday. That's because they reported great numbers, and specifically in their cloud business, where other companies are able to use their infrastructure.
Amazon, AWS, killer numbers, but capital expenditures were 43 billion in the quarter and expected to be 160 billion through the year. Could go higher next year. Again, the stock was up marginally.
Google was up good. Alphabet was up good yesterday, but Amazon up marginally. All these companies reported killer numbers on top line growth.
It was really astonishing. Microsoft, killer numbers, too. CapEx expected to be 40 billion, expected to be about 160 billion and rise, especially again on the cloud side of their business, Azure, Amazon, it's with AWS.
But the stock sold off yesterday because of the consumer business, and that brings us to the next one, which is Meta. Killer numbers, too. Revenue up 33%, but net income up 16% and capital spending for Meta is expected to be 125 to 145 billion dollars, which is very, very, very high.
So, what do these numbers tell us? For starters, they tell us that we're starting to see a split here.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- mag 7 earnings
- ai infrastructure
- cloud computing
- meta monetization
- big tech capex
Companies and tickers mentioned
- GOOGL
- GOOG
- AMZN
- MSFT
- META
- Amazon
- Microsoft
- Meta
Watch the episode
Watch “Dylan Jovine | The Mag 7 Super Bowl is Here!” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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