A (3:46)

Plus guided learning paths with content designed to fit your unique interests. No sifting to find exactly what you need so you can spend your time learning to trade brilliantly. Learn more@schwab.com trading well, there's been a

B (3:59)

barrage of earnings reported this week, notably last night. It was a late one from the four mega tech hyperscalers, Microsoft, Alphabet, Amazon and Meta. Each of these companies has a market cap over a trillion dollars. This was huge combined news and three months ago when they addressed Wall street plans to collectively spend well over half a trillion dollars this year to build out their AI infrastructure. While these are enormous numbers and there are questions as to whether there'll be a return on these investments, we wanted to tackle the latest numbers and reports from each of these companies and do it with a bit of energy. So going to sprint through with our favorite form of role play. That's ticker on a sticker. We're going to give you the latest on these companies through their own voice. So John, kick us off.

A (4:42)

All right. I'm Microsoft, the OG of the group. I I've been doing it since 1975. Ticker MSFT on the NASDAQ and I will put that sticker on.

B (4:52)

Good looking sticker. Well done. Like it.

A (4:54)

Market cap of $3.1 trillion. Revenue came in at 83 billion, which was up 18% year over year, beating expectations. Earnings per share of $4.27 beat by 21 cents. And let's talk about the cloud. Since the focus for all these tech companies is hyperscaling, let's start there. After all I operate over 500 data centers worldwide and. And let's take it to the cloud, the Microsoft Azure cloud. Revenue from my Azure and other cloud services came in at $35 billion. That's up 40%. And I expect growth in the cloud to stay near 40% throughout the year. Capex. Of course, investors are concerned about the money we're all spending to build out these data centers. And for the recent quarter I spent $32 billion on CapEx and finance leases and that was up nearly 50%. Huge spend. And for the 2026 calendar year I, I anticipate $190 billion in capital expenditures. Tens of billion dollars more than analysts expected. But one factor, and you're going to hear this throughout all the earnings, it's getting more expensive to build out these data centers. 25 billion of that 190 estimate is simply from higher component prices. Memory is getting expensive, Ann. And my stock was already down 12% this year. Concern that AI is going to eat my software business, the core of which remains Microsoft Office. But PowerPoint. Woot woot, we're still in the game. So far, the reports of my enterprise demise are exaggerated. My productivity and business processes segment, which includes office, produced $35 billion in revenue. That's the same amount that Azure brought in and up over 17% this year. Plus I added 33% more paid Microsoft copilot seats in the last quarter. There's concern I'm losing my first mover advantage with that weak AI product. But there has been growth. Finally, let's talk about OpenAI.

B (6:45)

Let's always talk about OpenAI.

A (6:47)

Everyone wants to talk about OpenAI. My exclusive partnership with OpenAI has come to an end. It's no longer exclusive. We're still partners in many ways. But perhaps that tie up wasn't serving me. In the last quarter, my adjusted earnings included a $14 million decrease in net income from my investments in that company. Now that's a small number, 14 million. But it reflects the volatility of the relationship. Overall, Microsoft shares down 4% today, over 15% so far this year.

B (7:16)

Good. Run Microsoft through the latest with you. Love it. Well, I am going to take on Amazon. I have ticker AMZN on the nasdaq. Here's my ticker on a sticker going on my sweater. You can hear the sticking sound as it adheres. Market cap of $2.8 trillion. Revenue 182 billion. Up 16% year over year, beating estimates. Speaking of a beat, earnings per share CL locked in at $2.78 beating estimates by a whopping $14 cents. Well, let's talk about cloud, because revenue in my cloud segment, Microsoft mine is called AWS, increased 28% year over year to $38 billion. That's 3 billion more than Microsoft. Representing my fastest growth in more than three years. Capex might be the central story of my earnings narrative. I project my capital expenditures will reach $200 billion this year in even more than the 190 billion that Microsoft is expecting. Well, there is concern over the fact that all of that cash spend has dwindled my free cash flow by 95% over the past 12 months. So I'm now sitting on only air quotes, $1.2 billion now operating cash flow jumped to just under 149 billion over the last 12 months. That's a 30% increase. I'm just spending it. And pretty quickly. Well, my CEO Andy Jassy is defending this level of spend, saying on the earnings call quote, in times of very high growth, like now, when the capex growth meaningfully outpaces the revenue growth, free cash flow is challenged until these initial tranches of capacity are being monetized and revenue growth outpaces capex growth. So yes, that would seem intuitive, but my investors are asking the question, we get that, but when are you going to show us that monetization? Well, let's also talk about the fact that I'm not all cloud. Remember, I do in fact have Amazon.com and one piece that is growing in my portfolio is advertising revenue, most of it coming from the Amazon.com site. So my advertising revenue is now about half the size of that brought in by Amazon Web Services or aws. Ads are one of my fastest growing and more profitable businesses. And just one last note about my OGE commerce site. You know I'm always trying to stick it to Walmart, who last July ran their Walmart deals event today overlap with my prime day. Well, this year's prime day discount bonanza will be held in June, a month earlier than its typical timeframe. Shares bounced around today, started up, drifted down as my investors evaluated their AI spend, eventually ending the day up over 1%, up over 15% year to date.

A (9:53)

Amazon, I love that you're getting in the mud with Walmart. All right, I am. Alphabet got my ticker here. Goog. Because don't forget Alphabet is the parent company of Google ticker GOOG. On the NASDAQ market cap of $4.2 trillion, that's the biggest of these four. Revenue of $110 billion was up 22% year over year, beating expectations. Earnings per share of 5.11 beat expectations by $2.50, nearly double the EPS for the same quarter last year. And like the rest, all eyes are on my capex and on the earnings call. I upped my expected spending for the year by $5 billion, closing in on that 190 billion that Microsoft is eyeing. Plus, looking at 2027, I expect CapEx to increase, quote, significantly. Now, cloud, there's a bit more confidence that my spend is worth it. Cloud sales hit $20 billion last quarter. That was up 63%. And while that's still lower than Microsoft and Amazon's 35 billion, I did it with a 33% operating profit margin. And, and that margin is rising quickly. Over at Alphabet. I don't provide basic compute and storage like you might associate with aws. I have higher margin AI analytics and security offerings. That's a distinction. In fact, my CFO said on the earnings call, we are seeing unprecedented internal and external demand for AI compute resources. The investments we are making in AI is delivering strong growth as evidenced by the record revenues and backlog growth in Google Cloud. And let me point out about that backlog, and that's shorthand for demand. Pent up demand. It nearly doubled from the previous quarter, hitting $462 billion. Our CEO noted that, quote, our cloud revenue would have been higher if we were able to meet demand. So it's out there. Finally. Now, Amazon, you think you're hot stuff with your advertising business bringing in 17 billion. I'm Google, I'm YouTube. I pioneered and perfected the ads business and advertising revenue. Still, my core business represents 70% of my total revenue. Sales there were up 16%. And if we're talking search, remember search that was going to get eaten and taken over by AI, it's still there. And it represented 19% growth this last quarter. So between the demand and ad revenue, investors are bullish. Shares were up nearly 9% today, up 20% year to date. And for me, Google up 135% year over year.

B (12:21)

Well, that is a tough, tough act to follow and never more so than if you are meta, which I am about to be. Here I am, my ticker meta on my sticker. There is the sticky, sticky sound. Trading on the Nasdaq market cap, one and a half trillion dollars, the lowest of the bunch. Well, revenue of $56 billion was up 33% year over year over here, marking my fastest quarter for growth since 20. And my earnings per share beat estimates by a solid 50 cents coming in at 7 bucks 31. So CapEx, let's talk about that. Strong earnings as I just said. But my shares are down today because my investors are concerned over my capex. The headlines everywhere today are that for 2026 I raised my forecast range to 125 to 145 billion, up $10 billion from where I had that forecast before. And just as Microsoft called out, that increase is due in part to higher component pricing. Well, as a reminder, out of the four of us, I'm the only company that doesn't have a public cloud computing service. These infrastructure investments are for my own use. That's better products like Facebook, WhatsApp and Instagram selfishly sitting on my own pile of cloud. So analysts are keying in on the numbers for those core products specifically. Well, about those apps. Daily active users were up 4% year over year, but we did see a decline of 5% from the previous quarter, missing expectations. And our leadership said the war in Iran and a restriction on access to WhatsApp in Russia are at the cause. Are the cause of that on the upside here over at Meta, I showed them 19% more ads and was able to keep ad prices rising at the same time up 12%. Well, we have our AI initiatives to thank for that, increasing engagement and ad targeting. Otherwise, on the AI front, after a few shifts in strategy and a talent overhaul bringing in Alexander Wang last year, we think we're back on track because earlier this month we debuted musespark, our first proprietary foundation model. While not necessarily specific, my CEO Mark Zuckerberg is excited about its potential, saying on my earnings call we had a milestone quarter with strong momentum across our apps and the release of our first model from Meta Superintelligence Labs, we're on track to deliver personal superintelligence to billions of people. And fine, I will flag this from my earnings. Meta said its multiple youth safety related legal cases may, quote, ultimately result in a material loss. We suffered two trial losses in March and there may be more to come. The apps are our core and this could be disruptive. So between those pressures and that Capex spend, my stock price was the loser of the day. Down over 7% today, down around 7% year to date. Let's take a break and when we come back, we'll take a spin through the headlines moving the markets today. And now a word from our sponsor, CME Group. Capturing opportunities can be like catching lightning in a bottle, especially when you're juggling risk management in an unsteady market. That's Where CME Group comes In CME

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B (16:23)

There it is, the closing bell. It's 4pm on the East coast and the market's wrapping up for the day. We don't have a ticker tape, so let's throw it over to our human ticker. Our producer, John A better than expected

A (16:32)

jobs report helped boost markets to record high finishes today for both the S&P 500 and the NASDAQ. The S&P 500 up a percent, the NASDAQ up 1 and 6. 10 of a percent and the Dow up 6. 10 of a percent. For the day. Brent crude oil prices, the global energy benchmark, surged to $126 per barrel, its highest level in four years. The spike followed an Axios report that President Trump is set to receive a briefing on potential military action in Iran. Plans reportedly include a quote, short and powerful wave of strikes. After that initial surge, oil prices pulled back slightly, Brent crude settling around $113 today.

B (17:11)

Over to other headlines, moving the markets today in the battle of the shot versus the food. Let's start with GLP1 maker Eli Lilly. Well, booming sales of weight loss shots fueled strong revenue and profit growth for Eli lilly. That's ticker LLY sending its shares up over 10% today. Consumer demand offset falling prices for the drugs and for the quarter. Sales of Lilly's Mounjaro more than doubled to nearly $9 billion. Sales of Lilly's weight loss shot Zepbound also up, rising 79% to $4 billion, all of which resulting in Lilly raising its forecast of full year 2026. Sales and profit now. Not included in these results were Lilly's weight loss pill, which debuted earlier this month and so will start showing up in the next quarter's earnings. Well, from the shot now to the

A (17:59)

food, shares in Magnum Ice Cream Company ticker MICC were up 15% today on the back of strong earnings for the maker of Ben and Jerry's, which was spun off from Unilever last year. Organic sales grew 4.5% for the quarter and the company scooped up revenue of $2 billion. Earlier this week we discussed the success Coke is having with Mini Cokes. Well, no surprise then. Mini Ice Cream is doing well for Magnum. The company cut production of big ice cream cartons and developed smaller sized alternatives including Magnum Bon Bon Ice Cream Bites. With the CEO saying people are pivoting away to higher quality, more healthy and smaller delicious.

B (18:38)

I want it to be higher quality, more healthy and bigger. Well, in the savory section, things are looking up for chipotle. That's ticker CMG. Shares of the restaurant chain jumped nearly 3% after posting a surprise increase in same store sales. They were up half a percent, beating expectations for a 0.77% decline. CEO Scott Boat writes that the results exceeded the company's own projections. He added that the momentum has carried into the second quarter. This comes off the back of Chipotle struggling last year as inflation weighed on consumers and spending softened. But efforts to bring diners back from returning fan favorites like Chicken al Pastor to new menu items and an updated loyalty program now appear to be working.

A (19:21)

I think I've heard this earlier this week. I'll add that Cantina Chicken and a loyalty program were highlighted in Taco Bell's excellent results. Just earlier this week.

B (19:29)

Shares of Royal Caribbean ticker RCL gained over 4% after posting positive earnings. Total revenue rose 11% but came in slightly below Wall street expectations.

A (19:39)

The company said bookings are currently running at a higher pace than the same time last year. That's a rebound after a slowing in March and early April blamed on geopolitical tensions, but doesn't seem clear how long that easing of tensions is going to last. And Royal Caribbean lowered the top end of its full year guidance due to those rising fuel prices.

B (19:56)

That's it. Today's Brew Markets Daily and Brew Markets

A (19:59)

Daily is hosted by Anne Barry and produced by John Curto, Tarkab delatif, Aveni La Roya and Emily Millard. Our Technical director is Luis Ferries and Brittany de Taco is our audio engineer. The President of Morning Brew Inc. Is Devin Emery.

B (20:11)

Wake up tomorrow with the Morning Brew newsletter and tune in to Neil and Toby on Morning Brew Daily. See you back here tomorrow. Same time, same place.

A (20:27)

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