Charles Schwab’s Nathan Peterson, director of derivatives research and strategy at the Schwab Center for Financial Research, summed up the split tape after Wednesday’s mega-cap tech reports with a clear thesis on the Schwab Market Update Audio episode “Mag 7 Earnings, GDP, and Inflation In-Focus.” Four titans reported, all four beat, and only one stock rallied. Peterson’s read on the divergence is the lens retirement-focused investors should bring to the rest of this earnings season.
Peterson’s words: “The post-earnings reaction to the Fab Four shows the results were largely expected by investors.” He added that “Inline guidance from both Meta Platforms and Amazon is not going to impress the Street when you have increasingly higher CapEx budgets, so a post-earnings sell-off for inline guidance is an easy explanation.”
The CapEx Bar Just Got Higher
Capital spending is the through-line. Alphabet (NASDAQ:GOOGL | GOOGL Price Prediction) put up $5.11 per share against $2.62 consensus, with revenue up 22% to $109.9 billion and Google Cloud revenue surging 63% to $20 billion after Alphabet committed up to $185 billion to its AI capital spending program. Cloud backlog nearly doubled quarter-on-quarter to over $460 billion. The stock jumped nearly 4% on the report and added another 5% in Thursday trading.
Meta: A Raised CapEx Number Was the Sticking Point
Meta Platforms (NASDAQ:META) dropped almost 6% in initial postmarket action despite easily topping consensus earnings and revenue rising more than 33% YoY. The flashpoint was the upward revision: management raised full-year 2026 CapEx guidance to $125 billion to $145 billion, up from $115 billion to $135 billion, citing higher component pricing and additional data center costs. Shares slid 10% Thursday. Investors also looked through an $8.03 billion income tax benefit that added $3.13 per share to the headline EPS.
Amazon and Microsoft: Strong Clouds, Heavy Spend
Amazon (NASDAQ:AMZN) reported cloud business growth of 28% to $37.6 billion, but free cash flow declined significantly amid rising AI investments. Q1 capital expenditures hit $44.2 billion, up 77% year-over-year, driving trailing free cash flow down 95% to $1.2 billion.
Microsoft (NASDAQ:MSFT) showed Azure cloud revenue growth of 40% YoY, exceeding guidance of 37% to 38%, with commercial RPO of $392 billion, up 51% year-over-year. CFO Amy Hood told analysts “we now expect to be capacity constrained through at least the end of our fiscal year” and that the FY26 CapEx growth rate would run higher than FY25. The shares fell 5% Thursday.
What It Means Going Forward
Peterson’s framework is the takeaway. With the VIX at 18.81 on April 29, these were stock-specific reactions in an otherwise calm tape. The bar has reset: when CapEx is climbing toward a combined half-trillion dollars, in-line revenue commentary will not clear it. Alphabet showed what does. Investors can review the Alphabet 8-K exhibit directly for the cloud detail that set the standard.
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