Big Tech Posts Strong Earnings as AI Spending Pressures Cash Flow

The logos of Google, Apple, Facebook, Amazon, and Microsoft displayed on a mobile phone and a laptop screen. Justin Tallis/AFP via Getty ImagesLast week was considered the most important week of this earnings season, as five of the “Magnificent Seven”—Alphabet, Amazon, Meta, Microsoft, and Apple—reported their quarterly results. Although overall performance was solid, market reactions diverged as an AI-spending spree squeezed the free cash flow of some of these companies.“Magnificent Seven” is a market-coined term for a group of seven large U.S. tech-focused companies that have had an outsized impact on stock market performance in recent years. Aside from the five companies mentioned above, the group also includes Nvidia and Tesla.Strong EarningsAlphabet reported $109.9 billion in consolidated revenues for the first quarter on April 29, a 22 percent increase, driven by strength across Google Services and Google Cloud.