Alphabet, Amazon Outpace Meta in AI During Earnings Bonanza

Summary

Bloomberg Intelligence Podcast

Episode: Alphabet, Amazon Outpace Meta in AI During Earnings Bonanza
Date: April 30, 2026
Hosts: Paul Sweeney, Scarlet Fu
Guests: Mandeep Singh, Anurag Rana, Sam Fazelli, Chris Chilino

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Episode Overview

This episode unpacks the latest earnings bonanza among major tech (Alphabet, Amazon, Microsoft, Meta), pharma (Eli Lilly, Merck), and industrial (Caterpillar) players. The focus is on how investments in AI are transforming technology giants, the competitive dynamics of cloud and AI spending, standout trends in pharma with obesity medications, and Caterpillar’s record results as AI infrastructure demand surges. The analysts dig into the numbers, management commentary, and what it all means for investors, with notable moments and direct quotes illuminating the shifting investment landscape.

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Key Discussion Points & Insights

1. Big Tech Earnings: AI’s Winners and Losers

Meta Stumbles Despite Growth

• Meta shares dropped 10% due to investor concerns over sharply rising capex (mainly for memory components), with unclear AI monetization timelines.
• Mandeep Singh (02:13):

  "Capex increase tied to memory components, not really tied to additional capacity, but it was enough to cause this, you know, 10% drawdown in the stock overall fundamentals were still strong when they reported the quarter for their core business."

• Meta’s AI initiatives are less focused on coding agents (the current growth engine in AI) and more on long-term “personal super intelligence” assistants, but monetization is still vague.
• Paul Sweeney (03:26): Highlights investor skittishness at Meta’s “not very precise plan for how each product will be cultivated.”

Alphabet Shines with Efficiency

• Alphabet raised capex, but by a smaller margin than Microsoft and Meta, reflecting superior capex efficiency.
• Mandeep Singh (03:52):

  "Out of all the hyperscalers, [Alphabet] has the best capex efficiency... the cloud business is growing at the fastest rate compared to other hyperscalers."

• Alphabet’s ability to leverage compute across businesses (Search, YouTube, Cloud) fuels margin upside, leading to a robust stock reaction to their earnings beat.

The AI Investment Super Cycle

• Companies are locked into a “super cycle” of AI investment, with demand outpacing supply, particularly in cloud infrastructure.
• Mandeep Singh (05:05):

  "When you think about even Amazon $150 billion business growing at 28% and Google $80 billion cloud business growing at 63%. So you are seeing that ROI with these AI investments and there's no reason to curtail that investment when you're seeing this kind of a top line lift."

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2. Cloud Race: Microsoft, Amazon, Google Compared

Microsoft

• Azure’s cloud business is now estimated at ~$110 billion, growing at 40%, but its growth was overshadowed by Google’s acceleration.
• Anurag Rana (08:56):

  "For Microsoft, growth accelerated 1 percentage point from 38% to 39% in constant currency. But when you look at Google, it went from 48% to 63%. So it's a relative game."

• Microsoft remains an AI leader, especially with Copilot, but user penetration of paid Copilot is still relatively low.
• Anurag Rana (10:35):

  "They have about 400 plus million users... only 20 million are paying right now. So the penetration rate is, let's say, about 10%."

Amazon

• AWS at a $150+ billion run-rate, grew 28%. The addition of OpenAI models could further accelerate growth, as the bulk of Fortune 2000 data sits with AWS.
• Anurag Rana (11:53):

  "Amazon web services over $150 billion run rate business grew 28%. We think that rate of growth actually improves... They added OpenAI models into their ecosystem ... that’s going to spur even more enterprise AI adoption."

• AWS is well-positioned as enterprises transition from legacy systems to AI-driven "agentic" architectures.

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3. Pharma Earnings: Obesity Medications in Focus

Eli Lilly

• Major beat on sales/profits due to international demand for obesity drugs, not just US demand.
• Sam Fazelli (16:18):

  "What's driven this $2 billion increase ... is ex-US sales. So that's actually quite good because a lot of people always just keep thinking that everything is all US based."

• Stock popped 9% on the news. Bears had focused too much on the new oral drug’s US rollout and missed the strength in the existing portfolio.

Merck

• Reported a solid but less impressive beat; demand for newer drugs and inventory build were the main drivers.
• Merck is developing (but hasn’t yet launched) a competitive weight loss medication — a space dominated by Lilly and Novo Nordisk.

Market Dynamics: Oral Obesity Drugs

• Eli Lilly’s oral weight loss pill is off to a fast US launch but may face challenges vs. Novo’s more efficacious pill, which must be taken under stricter conditions (e.g., fasting).
• Sam Fazelli (19:03):

  "Maybe it's a bit more likely that people will continue on that and that Lily will have a tough time gaining momentum with its oral pill... They have the better obesity injection today in terms of efficacy. Novo has the better pill."

• Both companies are vying for dominance in a market expected to reach $20B+ by 2030.

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4. Industrial: Caterpillar’s AI-Related Boom

Caterpillar’s Results

• Caterpillar delivered another top- and bottom-line beat, with all business segments contributing and a record backlog increasing visibility.
• Chris Chilino (23:43):

  "Cat continues to deliver against pretty lofty expectations with another top and bottom line beat this quarter...record backlog continues to grow significantly quarter over quarter."

• Raised long-term growth targets, citing especially strong power generation and energy demand.

AI Infrastructure Tailwinds

• Surge in data center construction (to power AI) boosts demand for Caterpillar’s power and energy products.
• Chris Chilino (24:41):

  "Not only do we have all these secular tailwinds on the power generation side, but now we're starting to see the cyclical tailwinds start to kick in in terms of construction and mining."

• Growing power backlog helps mitigate business cyclicality, but Caterpillar remains fundamentally a cyclical company.

Caterpillar Stock Milestones

• Shares up 8.8% on the day, 53% YTD, and a massive 184% on a trailing twelve-month basis.
• Paul Sweeney (25:15):

  "Wow...52 week high. An all time high for the stock. $880 a share. They need a 10 for 1 split badly. I think so."

Competition

• Major competitors: Komatsu (mining), Deere (construction expansion), Hitachi, Volvo, Cummins (power generation).

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Notable Quotes & Memorable Moments

• Mandeep Singh (02:13):

  "Capex increase tied to memory components, not really tied to additional capacity, but it was enough to cause this...10% drawdown in the stock."

• Mandeep Singh (03:52):

  "Alphabet, out of all the hyperscalers, has the best capex efficiency."

• Anurag Rana (10:35):

  "The biggest growth opportunity for [Microsoft]...only 20 million [out of 400M Office users] are paying [for Copilot] right now."

• Sam Fazelli (16:18):

  "There's an enormous juggernaut of a business behind [Lilly's new oral pill]...driven by ex-US sales."

• Chris Chilino (23:43):

  "[Caterpillar's] record backlog continues to grow significantly quarter over quarter and management raised their long term 2030 growth targets."

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Timestamps for Key Segments

• [02:13] – Meta: Earnings reaction & AI capex concerns
• [03:52] – Alphabet: Capex discipline & market reaction
• [05:05] – The AI investment “super cycle” explained
• [08:56] – Microsoft: Azure’s status & Copilot penetration
• [11:53] – Amazon: AWS growth, OpenAI integration & enterprise momentum
• [16:18] – Pharma: Eli Lilly’s obesity drug-driven beat
• [17:31] – Merck: Results & obesity drug pipeline
• [19:03] – Obesity medication market competition
• [23:43] – Caterpillar: Strong quarter & AI infrastructure demand

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Conclusion

The episode threads together broad themes of AI-driven investment across tech and industrials, rising differentiation among cloud giants, innovation-led reshuffling in pharma (notably obesity drugs), and the hardware backbone (exemplified by Caterpillar) necessary to sustain the AI boom. Analysts expect the AI supercycle to power capex and revenue growth for years, with investors hunting for clear modernization and ROI signals in company disclosures.

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For further insights and full analysis, tune in to Bloomberg Intelligence LIVE weekdays from 10AM to 12PM ET, or catch podcast replays on your preferred platform.

Transcript

[Paul Sweeney]

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[Paul Sweeney]

Yesterday after the close, a lot of the big tech names reporting and it's kind of the market's kind of trying to suss out some winners and losers. Google, I guess on the plus side.

Yeah, not so much side.

So let's check in with Mandeep Singh. He does all the technology stuff for Bloomberg Intelligence. Mandeep meta trading down 10% let's start there. What's the market reacting to?

[Mandeep Singh]

The market is reacting to the capex increase when they don't have much to show, unlike their hyperscale cloud peers who clearly have seen that top line benefit. I mean Meta's top line growth is very strong. You know, 33% at the $200 billion run rate is very impressive. It's just that when you look for that extra line item where AI is categorized separately, they don't have much to show for it. And right now the growth in AI is around Coding agents. So Meta has a model, they've released it, but it's not something that specializes in coding agent. They are targeting more of the personalized super intelligence personal assistant, that kind of a use case. And they just haven't given us enough in terms of a timeline when they will start monetizing that use case. So all in all, capex increase tied to memory components, not really tied to additional capacity, but it was enough to cause this, you know, 10% drawdown in the stock overall fundamentals were still strong when they reported the quarter for their core business.

[Paul Sweeney]

Yeah, I guess investors don't like it to hear when the CEO is saying there isn't a very precise plan for how each product will be cultivated. Sounds too generic for their liking. We should mention as well, Met is now looking to sell up to $25 billion in investment grade bonds to kind of fund out all those spending plans they have. Speaking of spending plans, Alphabet is increasing its spending plans by I think about another $10 billion.

[Mandeep Singh]

Yeah, and look, when you compare the magnitude of increases from Microsoft which raised almost, you know, by 35, $40 billion at CapEx, Meta raised it by over almost 20 billion. And that was mostly attributed to memory price increases. So the question is why was Alphabet increase not of the magnitude yes, they raised, but it was a very slight increase. And that kind of goes to show that Alphabet, out of all the hyperscalers, has the best capex efficiency. They are able to use their compute across their apps, whether it's search, YouTube. Also, the cloud business is growing at the fastest rate compared to other Hyperscalers. So that CapEx efficiency is, is what's driving a lot of the margin upside and it's reflected, you know, in their numbers and guidance. So even though it was a beat and race from everyone, Alphabet's beat and raised was the most impressive and hence the stock reaction.

[Paul Sweeney]

Mandeep, where do you think we are in this hyper investment phase for AI? Is are we going to do this for another quarter or two or is this going to be a couple, three years?

[Mandeep Singh]

I mean this definitely has the makings of a super cycle. Almost everyone you know on the call yesterday from the management teams talked about how, you know, demand far exceeds supply. And look, the compute usage is showing up in the cloud numbers. When you think about even Amazon $150 billion business growing at 28% and Google $80 billion cloud business growing at 63%. So you are seeing that ROI with these AI investments and there's no reason to curtail that investment when you're seeing this kind of a top line lift. The only thing is, you know, component pricing memory notably is eating up a lot of this capex increase, but that's just again a function of demand being much higher than what these companies can supply in terms of components.

[Paul Sweeney]

Stay with us. More from Bloomberg Intellig coming up after this. If your finance team spends more time finding data than using it. If there's one entity here and one here and one here and one here. If scaling your business feels like starting over, you need the Intuit erp. Intuit Enterprise Suite is the AI native ERP solution that's powerful, painless and proven. Learn [e-mail] ERP Everyone has been there.

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[Paul Sweeney]

Some of the big earnings matter and Microsoft are big drags on the NASDAQ 100 while you have Alphabet going off basically to the moon right now, because it's seen as the winner and it's seen as the most efficient user of capex, it's been able to turn around investments and returns on that capex. Let's bring in Anuragrana of Bloomberg Intelligence. He is our tech analyst joining us from Chicago. Anurag, walk us through the results for Microsoft. First of all, Alexis mentioned how the cloud business saw good growth, but perhaps not good enough for investors.

[Anurag Rana]

You know, again, it's a question of relative growth compared to their peers. So for Microsoft, growth accelerated 101 percentage points from 38% to 39 in constant currency. But when you look at Google, it went from 48% to 63. So I think it's all, it's a relative game. Even in the case of Amazon Web Services, last quarter they grew at 24%, this quarter, 28.

[Sam Fazelli]

So we are really splitting hairs, but

[Anurag Rana]

I think that's what's really happening at this point.

[Paul Sweeney]

There's no scenario where Microsoft's not a huge winner in AI, is there, Anurag?

[Anurag Rana]

No, no, absolutely you're right about it. But again, it's a matter of One of the things we discussed even yesterday was if you go back in the history of Microsoft, they were the first company to showcase AI revenue and they saw a lot of benefit for that one one and a half years when everybody thought Amazon and Google is behind. Now it's slightly on the other side. They are seeing the benefit of AI which they didn't see, which means relative growth rates for them. But in the case of Microsoft, they have a very successful AI business. Their AI run rate is much higher than anybody at this point. They have copilot adoption very fast pace. Azure is doing well. And the funny thing is azure is now 100 plus billion dollar business. I think we think it's somewhere around 110 billion, growing at 40%. I mean, I think that's very impressive. But again, it's a question of if Google can beat by such a big margin. Well, why couldn't you?

[Sam Fazelli]

Hmm.

[Paul Sweeney]

I'm glad you bring up Copilot, because isn't there some concern that there's only a small percentage of Microsoft Office users who are paying for copilot AI tools? I mean, everyone has access to it, but not everyone wants to pay for it.

[Anurag Rana]

That is the biggest growth opportunity for them. Frankly, if you see they have about 400 plus million users. Out of those 400 million users, we think about 200 of them are power users, people like you and Paul. And then within that cohort, only 20 million of them are paying right now. So the penetration rate is, let's say about 10%. Over time that's going to increase and that's where the ARPU increase is going to be. And see a much rapid growth rate both in terms of the number of users going up and then, you know, taking up dollars along with it.

[Paul Sweeney]

So get them hooked first. Right, Paul?

Yep. This is a milestone day for AI Universe. You know why?

Why?

I downloaded the Chat GPT app today

for the first time ever.

First time.

What was your first question to chat?

Well, Sarah Livesey, one of our producers, showed me. She went in and said, hey, give me a picture of traders looking for direction, you know, like in the market. And it gave her like a great image. So I did the same thing and it wasn't as good an image, but it was a pretty good, good image. So Sarah's much better than that. I am.

You got to work on your palm skills first thing.

I'm so I'm getting there. Anurag, how about Amazon here? Their cloud, that business seems to be big. And again, another one of these companies throwing a lot of money at this business now.

[Anurag Rana]

Amazon web services over $150 billion run rate business grew 28%. We think that rate of growth actually improves in the next few quarters because of the massive backlog. Imagine just a few days ago, they added OpenAI models into their entire ecosystem, which they didn't have access to before. That's going to spur even more enterprise AI adoption. One of the things people don't realize is when it comes to Fortune 2000, who are the biggest spenders of money? Bulk of their data is in Amazon Web Services. That's all the cloud transition that's been happening for the last 15, 20 years. So they are actually at the center of this agentic shift for enterprises going from the legacy way of doing stuff towards agents.

[Paul Sweeney]

Stay with us. More from Bloomberg Intelligence coming up after this.

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[Paul Sweeney]

Let's head over to London San Frazelli, Director of Research for Global Industries Senior Pharma Analyst I have no idea where he is. He could be London could be anywhere in the world. That's how this guy rolls. But he covers all the pharma for Bloomberg Intelligence. Sam, I assume you and your team have been kind of busy here. We've got some earnings coming out of the the pharma companies here. Eli Lilly raising its annual sales and profit forecast to high demand for obesity medications. But that's just like perfect for this market. And the stock's up 9% today. What did you hear from Lilly?

[Sam Fazelli]

Yep. So, Paul, I mean the, the interesting thing here is that there's been quite a lot of skepticism. Particularly everybody was so focused on this oral drug, you know, the pill that they've got launched in the US So focused on that and tracking the weekly prescriptions that they forgot. Actually, there's an enormous juggernaut of a business behind it. And what's driven this $2 billion increase from 80 to 82 on the low side of the guidance for 2026 in sales is ex US sales. So that's actually quite good because a lot of people always just keep thinking that everything is all us based and everything's going to be driven by us. But of course, here we've got that increase and that's what's driving it. High quality beat. 9%. 9.1% up this minute.

[Paul Sweeney]

All right, so good news for those who are investors in Eli Lilly. That's a massive move. Nine percent up for, for the company.

[Sam Fazelli]

It had been suffering scarlet because of the issues of people worrying about that

[Paul Sweeney]

P. So maybe a little bit of catch up there as well. Merck also reported results and it beat its sales estimates demand for newer drugs. Remind me, does Merck have a weight loss drug on the market or is it developing any weight loss drug?

[Sam Fazelli]

They are developing. They're developing one, yes. There I think everybody is kind of. They've got one that licensed. Pretty much everybody's got their finger in that pie. I can't say absolutely everybody. Most people have got their finger in the pie trying to get a something on the market. And Roche, AstraZeneca and Time will tell whether they can compete in this. Clearly these guys are sewing up the market between themselves and Novo Nordisk. So Merck's results were a little bit more, I would say, meh. And as share price suggested, 0.6% up, there was a beat. But then of course, much of that was driven by inventory build, which is not something that the market gets too excited by because it's one off. And then of course one of the reasons I think they've been able to guide to A higher EPS is because they're going to have lower charges associated with an M and A deal they've done. And that's not really, you know, that's not a high quality beat. So business steady as she goes.

[Paul Sweeney]

Merck based in Rahway, New Jersey. Station stop. Rahway. There you go. That's how I know. Railway, Station, stop, railway. Like I never get off. That's where Merck is.

Jersey is big farmer land.

It is Jersey. You could just have an. That's the entire state, practically. So, Sam, for these oral obesity drugs, to what degree do you think that's going to expand the market?

[Sam Fazelli]

Yeah, so I think look at that expectations, folks are looking for one and a half billion dollars from a Lilly's pill this year.

[Mandeep Singh]

Wow.

[Sam Fazelli]

And it's only been on the market for a couple of. A couple of weeks. Two or three weeks. Right. So. And that might be a tough number to get to, especially listening to what the management were saying a little bit about the fact that they need to activate a whole bunch of patients, etc. And there is a question that comes to mind. We know that the Wegovy pill, although it's a bit more of a cumbersome thing, you have to take it half an hour before eating breakfast, etc. It gives you a better weight loss in terms of the average weight loss, say 14% versus 12. Let's say, let's say that's about the delta between them and we. So what are you going to do? Are you going to worry so much about your breakfast? I mean, not, not. Nobody gets up at night, eat straight away. Right. So they can take their job, potentially shower, get ready, etc. So maybe it's a bit more likely that people will continue on that and that Lily will have a tough time gaining momentum with its oral pill, which is an oral pill. Literally an oral pill, you just pop it, nothing to do with fasting or anything. And then of course you go to 2030, you get to 20 odd billion dollars. So look, they have the better obesity injection today in terms of efficacy. Novo has the better pill in terms of efficacy. So it's just going to be. Both of them are going to be fighting for that market share and Novo's kind of corrected quite a lot.

[Paul Sweeney]

Stay with us. More from Bloomberg Intelligence coming up after this.

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[Paul Sweeney]

All right, let's get back to some of these earnings here. Caterpillar some really strong numbers here. And when we want to talk all that big machinery stuff we go to Chris Chi Lino. He's at Bloomberg Intelligence, follows all those big engineering companies, construction companies. Chris, talk to us about Caterpillar here and their quarter.

[Chris Chilino]

Yeah, you know, Cat continues to deliver against pretty lofty expectations with another top and bottom line beat this quarter really solid across the board highlighted by better than expected performance in their construction business and sustained momentum in power and energy. But I think really more importantly here their record backlog continues to grow significantly quarter over quarter and management raised their long term 2030 growth targets. They also announced that they're going to invest in some additional large engine capacity expansion. So the long term visibility just continues to improve which we think, you know, should continue to, to drive this upward earnings cycle revision.

[Paul Sweeney]

And this is something that Matt Griffin of Bloomberg News has highlighted. He came on to talk to us about how Caterpillar was another way to play the AI boom. How much of this backlog and the growth that Caterpillar seeing is directly tied to a build out.

[Chris Chilino]

So it's a large portion, right? It's, you know, now power and energy is approaching, you know, roughly half the size of the business. But I think one of the takeaways I took from this quarter was that the backlog was really up across all businesses. And it's kind of at a unique time for Caterpillar in that not only do we have all these secular tailwinds on the power generation side, but now we're starting to see that the cyclical tailwinds start to kick in in terms of construction and mining. So all three businesses really starting to contribute to the overall enterprise.

[Paul Sweeney]

And shares of Caterpillar today are up 8.8%, up 53% this year, up 184% on a trailing twelve month basis.

Wow.

52 week high. An all time high for the stock. $880 a share. They need a 10 for 1 split badly. I think so. Is this because of the power business, Matt? When I think of company like Caterpillar, I think of a cyclical business. Is this making this business less cyclical?

[Chris Chilino]

It may help mitigate some of the cyclicality at the end of the day. I don't think it changes the underlying fundamentals of the business. This is still ultimately going to be a cyclical business over time but you're certainly seeing that the power gen, power and energy business, that backlog just continues to grow. So we have that additional production visibility which has really helped provide a little bit of a floor, at least during this downturn as construction and mining were quite soft over the past few years. So yeah, short answer, it helps mitigate it, but longer term it's going to be a cyclical business.

[Paul Sweeney]

Okay. I'm still kind of stunned by some of the numbers that Paul just rattled off. Who is Caterpillar's biggest competitor who picks up some of the slack that Caterpillar can't get to.

[Chris Chilino]

Yeah, I mean, as Paul alluded to, I mean the numbers are quite staggering and really if you look at the valuation, it's quite hard to digest as well. But they continue to deliver and exceed expectations. It seems like quarter in and quarter out in terms of competition. If you think about some of the more traditional equipment, particularly in the dirt or mining, it's Komatsu. They are the largest competitor to cat, particularly on some of the equipment businesses. You also have Deere who's trying to, you know, make bigger inroads into construction equipment. They're launching a whole new excavator lineup. And then there's a number of other regional players, the Hitachi Volvos of the world. And then on the power gen side, it's pretty diverse. You know where CAT plays, it still tends to be kind of at the smaller and the distance spectrum, right? So think you know companies like Cummins who also have the standby or backup power capacity.

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