Tech stocks today: Big Tech earnings highlight AI strength, Musk battles OpenAI

Market snapshot

Big Tech dominated headlines this week as four members of the so-called Magnificent Seven Alphabet, Microsoft, Meta and Amazon reported quarterly results after the bell, each beating profit expectations. Investors parsed the earnings not just for near-term numbers but for signs that heavy AI and cloud investments are translating into growth. Googles strong cloud performance and Gemini AI models produced the most upbeat market reaction, while investor attention also turned to a high-profile legal battle between Elon Musk and OpenAI that begins in a California courtroom.

Alphabet stood out after hours, lifting its stock by about 6% after reporting first-quarter earnings of $5.11 per share versus estimates of $2.62, driven by strength in Google Cloud and momentum from its Gemini AI models. Microsoft, while beating expectations on both top and bottom lines, saw its stock slip roughly 2% in extended trading amid lingering investor questions about Azure growth, Copilot adoption and the companys evolving relationship with OpenAI. Metas report featured another increase in its capital allocations to AI the company raised its capex outlook dramatically and its shares fell roughly 6% during the call. Amazon highlighted that AWS posted its fastest growth in 15 quarters, yet the stock traded lower by about 4% as heavy AI investment continued to weigh on free cash flow. Apple is scheduled to report earnings Thursday.

Across the quarter, the dominant narrative is clear: AI and cloud remain the primary growth drivers cited by corporate management teams, but the surge in capital spending to build infrastructure has created a tension between growth prospects and near-term cash flow.

Earnings, AI spending and sector dynamics

Executives at the major cloud providers emphasized that demand for AI services is raising both revenue opportunities and infrastructure costs. Industry estimates point to massive data-center and AI infrastructure spending: analysts expect the top U.S. hyperscalers to collectively spend hundreds of billions this year, with one cited figure putting hyperscaler capex at about $650 billion for 2026 and Amazon accounting for roughly $200 billion of that total. JPMorgan analysts have also revised upward their outlook for 2026 data-center capex among leading cloud providers, projecting growth in the 50-60% range.

Metas numbers crystallized investor concerns about the scale of spending required to compete in generative AI. The company raised its 2026 capital expenditure guidance to a staggering $125 billion$145 billion well above prior forecasts citing higher component prices and the need for expanded data-center capacity. Management also flagged regulatory risks in the U.S. and EU that could materially affect business and financial results.

Microsoft said it reworked its deal with OpenAI ahead of its earnings release: the amended agreement removes exclusive access to OpenAIs intellectual property that previously restricted the startup, while keeping Azure as OpenAIs primary cloud partner and first to receive new products. The change permits OpenAI to offer models across multiple cloud providers, potentially benefiting competitors like AWS.

That shifting commercial landscape is reflected in chip and infrastructure strategy moves across the sector. Alphabet announced it will begin selling custom Tensor Processing Units (TPUs) to a select set of customers for installation in their own data centers a break from its prior approach of renting TPU capacity through Google Cloud. Alphabet also unveiled two new TPU families, the TPU 8t for training and TPU 8i for inference, in a clear bid to expand its competitive footing against the dominant AI chipmaker Nvidia.

Qualcomm rallied on analyst chatter that it is collaborating with AI developers and semiconductor partners to develop smartphone processors optimized for next-generation AI capabilities a potential catalyst for renewed device upgrade cycles and a boost to mobile chip demand in the years ahead.

OpenAI, court trial and sector spillovers

The wider AI story took a legal turn as Elon Musks lawsuit against OpenAI reached trial in the U.S. District Court for the Northern District of California. Musk alleges OpenAI and several executives misled him about the company remaining a nonprofit before converting to a for-profit structure; OpenAI and its leaders dispute those claims. The case has drawn prominent tech figures to the witness list, including Sam Altman and Microsoft CEO Satya Nadella. The trials outcome could have reputational and financial implications for OpenAI and for companies closely tied to it.

A Wall Street Journal report earlier in the week also said OpenAI missed certain internal sales and user targets, which pressured shares of companies with commercial ties to the AI lab including Oracle, CoreWeave and AMD amid renewed investor scrutiny on how quickly AI startups can monetize their user bases.

Funding and competition among AI labs

The AI landscape is also being reshaped by new funding dynamics. Bloomberg reported that Anthropic is exploring a fundraising round that could value the company at about $900 billion, surpassing OpenAIs last reported valuation of $852 billion. Anthropic has recently attracted investment from Alphabet and Amazon at valuations near $350 billion in smaller earlier injections, and both investors have reserved options to expand their commitments. Such large private financings underline investor belief in the long-term addressable market for AI, even as near-term monetization and profitability questions persist.

What investors should watch next

Earnings season will continue to inform whether the markets optimism about AI-driven growth is sustainable. Key items to monitor include guidance around capex and free cash flow, traction for AI products (Copilot, Gemini, AWS AI offerings, and other enterprise deployments), and any incremental commentary about partnerships or chip supply. Regulators, legal developments most prominently the MuskOpenAI trial and execution on monetization will all play critical roles in shaping investor sentiment.

For now, the message from management teams is consistent: AI and cloud are driving the next wave of revenue growth, but turning that potential into sustained profits will require significant capital and careful execution. That trade-off will likely define market reactions as more quarterly reports roll in this earnings season.