We have been a few years since the AI boom and doubts about its profitability continue to loom large. We are witnessing a change in strategy by numerous AI companies such as Claude or Github that points in a clear direction: the end of the free model. Chatbots and other AI tools cost more money than they generate, what really makes money is something else and that thing is having data centers.
The real business of AI. The results of the big technology companies for the first quarter of 2026 have just been published and they make something very clear: the real business of AI is not the AI tools, it is being the one who rents the data centers to those AI companies. Amazon, Google and Microsoft have all posted strong revenues, largely driven by their cloud divisions. For its part, Meta has managed to raise revenue forecasts thanks to its advertising business. In other words, none of them are making money directly from their AI tools.
In figures. These are the most notable data for each company in this first quarter:
- Alphabet: has been the big winner, entering $109.9 billion22% more year-on-year and well above forecasts. Google Cloud grows 63% year-on-year with revenues of $20 billion.
- amazon: Amazon’s total turnover stands at $181.5 billion, of which 37,600 come from Amazon Web Serviceswhich represents an increase of 28% year-on-year and exceeds analysts’ forecasts.
- Microsoft: has entered $82.9 billion18% more than last year. Regarding Azure, the year-on-year growth is 40%.
- Goal: Revenues for this first quarter exceed analysts’ forecasts and reach $56.3 billion, which represents a 33% year-on-year increase driven by the advertising business in its family of apps.
More wood. Big tech companies are making a lot of money, but they are also spending a lot. We recently talked about how the capex (capital expenditure) of big tech companies by 2026 was already 25% of all world military spendingabout $650 billion combined. Well, if that already seemed crazy to us, Alphabet and Meta have announced that they are going to raise it even more. In the case of Alphabet, 5,000 million more than expected (they said 185,000 and now 190,000), while Meta increases to 10,000 million (it was 135,000 and now 145,000). The reason, of course, is to continue funding AI infrastructure. Amazon and Microsoft have not said anything about increasing spending, which was already very high, with 200,000 and 140,000 million respectively.
The market response. During the after hours, Meta was the most affected, with a 6% drop in the stock market. Microsoft was also punished with a 2% drop. In the case of Meta, the reaction of investors is what we have already seen in previous earnings conferences, mainly due to distrust regarding the increase in investment and doubts about whether this AI boom is sustainable in the long term.
Instead, investors rewarded Alphabet with a 6% rise and Amazon with 4%. Its commitment to AI is also stratospheric, but it is translating into more visible cloud revenue growth.
The strategic gap. There is a clear advantage between those who master more pieces of the AI chain (own chips, cloud, models and applications) and those who depend most on third parties. Here, Amazon and Alphabet are the best positioned companies and it is reflected very clearly in the results. Furthermore, as mentioned in the Wall Street Journalwidespread shortages of both chips and electricity are accelerating the formation of this fork.
Image | Xataka
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