Four out of the Magnificent Seven released their March-quarter results. Meta Platforms, Amazon, Alphabet, and Microsoft show uniform top-line growth, but fundamentally different outcomes in how AI spending is translating into returns. The divergence is in earnings quality, segment profitability, and cash flow under AI-led capex pressure. Here are the hits and misses by these companies:

Alphabet

Alphabet reported revenue of $109.9 billion (+22% YoY) and operating income of $39.7 billion, with margins expanding despite rising costs — operating margin came in at 36.1%, up two percentage points year-on-year.

Hit: A combination of cloud profitability and search stability. Google Cloud generated $20.03 billion in revenue (+63% YoY) and $6.6 billion in operating income, up sharply from $2.2 billion a year ago. Cloud backlog nearly doubled quarter-on-quarter to over $460 billion. At the same time, Google Services delivered $89.64 billion in revenue, with search queries at all-time highs despite AI integration, and total advertising revenue reaching $77.25 billion. 

Miss: Alphabet is scaling infrastructure aggressively, which will pressure margins through higher depreciation and operating costs. 

The company raised its full-year capex guidance to $180–190 billion, up from $175–185 billion, signalling continued acceleration in AI infrastructure investment. 

Amazon

Amazon posted revenue of $181.5 billion (+17% YoY) and net income of $30.3 billion (vs $17.1 billion a year earlier). However, this includes a $16.8 billion pre-tax gain from its Anthropic investment, materially inflating reported profit.

Hit: Its cloud segment, the Amazon Web Services (AWS), delivered $37.6 billion in revenue (+28% YoY), its fastest growth in 15 quarters, and $14.2 billion in operating income, at a margin of nearly 38%. AI workloads are increasingly driving demand. North America retail also showed improvement, with $8.3 billion in operating income and an expanded margin of 9%.

Miss: The miss is visible in cash flow and segment imbalance. Free cash flow on a trailing 12-month basis fell to $1.2 billion from $25.9 billion a year earlier, a near-complete collapse driven by infrastructure spending. International operations remain thin, with $39.8 billion in revenue but comparatively modest returns. 

Amazon's Q1 capex reached $44.2 billion, above estimates, and the company has signalled full-year capex of approximately $200 billion, reflecting the scale of its AI and data centre expansion. 

Meta Platforms

Meta reported revenue of $56.31 billion (+33% YoY) and net income of $26.77 billion (+61% YoY). However, this includes an $8.03 billion income tax benefit. 

Hit: Its core business. The Family of Apps (Instagram, Facebook, WhatsApp, Messenger, and Threads)  segment generated $55.91 billion in revenue, with operating income of $26.9 billion, reflecting strong ad pricing and engagement gains driven by AI-led targeting. Ad impressions across the family of apps rose 19% year-on-year, while the average price per ad increased 12%. 

Miss: The miss is Reality Labs (virtual and augmented reality arm), which posted revenue of $402 million but an operating loss of $4.03 billion for the quarter, continuing a multi-year pattern of heavy losses with no near-term monetisation visibility. Total costs and expenses rose to $33.44 billion (+35% YoY), and operating income of $22.87 billion, while up 30%, still sits well below what the headline net income figure suggests once the tax benefit is stripped out.

Meta's Q1 capex was $19.84 billion, and the company raised its full-year capex guidance to $125–145 billion, up from its previous range of $115–135 billion, thereby continuing with aggressive spending on AI infrastructure.

Microsoft

Microsoft reported revenue of $82.9 billion (+18% YoY) and net income of $31.8 billion (+23% YoY), driven primarily by cloud. 

Hit: Azure and enterprise AI adoption. Microsoft Cloud revenue reached $54.5 billion (+29% YoY), with Azure growing 40%, beating management's own 37–38% guidance, supported by rising AI workloads. The company's AI business has now crossed a $37 billion annualised revenue run rate, up 123% year-on-year. Copilot adoption continues to expand, with over 20 million paid commercial seats, up from 15 million last quarter. The commercial remaining performance obligation increased 99% to $627 billion.

Miss: Monetisation efficiency and weaker non-core segments. Despite Azure's acceleration, the gap between capex and high-margin AI revenue remains a constraint. On the gaming side, Xbox content and services fell 5% year-on-year, and Windows OEM and Devices declined 2%.

Quarterly capex came in at $31.9 billion, notably below analyst estimates of around $35.3 billion.