Original | Odaily Planet Daily(@OdailyChina)
Author|jk
In late July 2026, the U.S. stock market's technology sector entered its most intensive earnings reporting week of the year. Google parent Alphabet kicked it off, followed sequentially by Intel, Microsoft, Meta, and Apple.
The theme across all five earnings reports was almost entirely consistent: AI infrastructure investment continues to accelerate, but the market's patience for when this massive spending will translate into tangible returns is rapidly diminishing. While revenue and profits mostly beat expectations, investors' reactions diverged significantly. Some companies saw their stock prices surge due to better-than-expected guidance, while others faced sell-offs due to capital expenditures (capex) or forward guidance falling short of expectations.
Below, Odaily Planet Daily provides an analysis of this tech giants' earnings season and the related U.S. stock movements.
Google: Revenue Hits Record of 12 Quarters of Double-Digit Growth, But Stock Drops 7%
After the U.S. market close on July 22, Google parent Alphabet released its Q2 2026 earnings. Total revenue reached $119.796 billion, up 24% year-over-year, marking twelve consecutive quarters of double-digit growth. Operating profit was $40.77 billion, better than the market estimate of $40.55 billion. Net income attributable to shareholders reached $112.1 billion, which included approximately $99 billion in unrealized gains on equity securities. The cloud business was the biggest highlight of the quarter. Google Cloud revenue hit $24.8 billion, soaring 82% year-over-year, accelerating from 63% growth last quarter and far exceeding market expectations of $22.3 billion. Enterprise AI solutions became the core growth engine for Google Cloud for the first time, with Gemini Enterprise paid monthly active users growing 40% quarter-over-quarter, and the cloud backlog doubling sequentially to $460 billion.
In short, Google's revenue performance in this report was very impressive.
However, what made the market nervous was Google's capital expenditures: In Q2, Alphabet's capital expenditures soared to $44.92 billion, doubling year-over-year, with about 60% spent on servers and 40% on data centers and network equipment. The company also significantly raised its full-year 2026 capex guidance from the previous range of $180-190 billion to $195-205 billion, and explicitly stated that spending will increase further in 2027. The massive outlay directly eroded current cash reserves, resulting in Alphabet recording negative free cash flow for the first time since going public, at approximately negative $5.855 to $5.9 billion.
Google's stock price plunged after-hours on the 22nd. Source: TradingView
After the earnings release, Google's stock price dropped over 4% in after-hours trading. The next day (July 23), the three major U.S. stock indices collectively tumbled, and Google's stock fell over 7% at one point. Reports attributed this to escalating Middle East tensions pushing up oil prices. However, this factor also compounded investors' concerns about continuously expanding AI capex and cash flow prospects.
Intel: Strongest Revenue Growth in Over Fifteen Years, But Stock Experiences Rollercoaster Reversal
Intel reported earnings after the U.S. market close on July 23 (Beijing time July 24), delivering the most contrasting report of this earnings season. Q2 revenue grew 25% year-over-year to $16.128 billion, marking the strongest growth pace in over fifteen years and far exceeding market expectations of $14.42 billion by nearly 12%. The core growth driver was the Data Center and AI business, with the segment's revenue reaching $6.3 billion, soaring 59% year-over-year, well above analyst expectations of $5.6 billion. Driven by this, the company returned to profitability on a non-GAAP basis, with net income of $2.2 billion and EPS of $0.42. It still reported a GAAP net loss due to fair value changes in U.S. government-trusted shares, but operating cash flow was strong at $7 billion. The company also raised its Q3 revenue guidance, with a midpoint around $16.3 billion, implying over 15% year-over-year growth, also above market expectations.
However, alongside the results, Intel announced it was raising its full-year 2026 capital expenditure guidance from a previous $18 billion to over $20 billion, and previewed that 2027 capex would be significantly higher than 2026 levels. The company cited exceptionally strong customer demand signals, stating that data center CPU demand has exceeded its continuously expanding supply capacity, with management using the word "takeoff" to describe the current demand momentum. Goldman Sachs noted in a post-earnings report that the significant increase in capex implies rising near-term free cash flow pressure, expecting Intel's net debt-to-EBITDA ratio to rise from 0.8x to 1.2x in 2026, and front-end wafer equipment spending to increase about 40%, reflecting the company moving from fab construction to equipment filling phases. Goldman thus maintained a "Neutral" rating with a $150 price target, not upgrading its rating despite the earnings beat.
Intel stock turned from gains to losses. Source: TradingView
Before the earnings release, Intel's stock closed down over 2% in regular trading on the day, reflecting lingering market doubts about its fundamentals. After the report, the stock surged over 13% in after-hours trading. However, this rebound didn't fully hold. As the market gradually shifted focus to the raised capex issue, Intel's gains narrowed significantly, at one point turning to a loss of over 7%, before paring losses to around 4% gains. This pattern of a sharp post-earnings surge followed by a partial reversal also reflects ongoing market division in judging Intel's transformation, with bulls and bears still in a stalemate based on the earnings information.
Microsoft: Azure Breaks $100B Annualized Revenue for First Time, Capex Lowered, Stock Posts Best Single-Day Performance in 18 Years
Microsoft reported its fiscal Q4 2026 (corresponding to calendar Q2) earnings after the close on July 29, receiving the most positive stock market reaction among the five companies. Quarterly revenue was $90 billion, up 18% year-over-year, beating market expectations of $87.7 billion. GAAP net income was $35.766 to $35.8 billion, up 31%, with diluted EPS of $4.81, also beating expectations of $4.24. Net income growth was partly aided by a $3.2 billion gain from its Anthropic investment and lower-than-guided expenses related to a voluntary departure program. The Intelligent Cloud segment revenue was $39.3 billion, up 32%, with Azure revenue growing 43% year-over-year, driving Azure's annual revenue to surpass $100 billion for the first time in fiscal 2026. Commercial remaining performance obligation, a measure of future contracted revenue, reached $678 billion, surging 84% year-over-year, significantly above expectations. Fiscal Q4 capex was $41 billion, up 69%, with full-year fiscal 2026 capex totaling $145.3 billion.
In the context of Alphabet's stock plummeting after raising its capex guidance, the market was highly nervous about whether Microsoft would similarly "up the ante." Microsoft, instead, signaled lower spending: During the earnings call, the company lowered its calendar year 2026 capex expectation from a previous $190 billion to $175 billion, while management projected positive free cash flow for fiscal 2027. Management emphasized that the actual investment plan hadn't changed, and the lower spending figure primarily resulted from an accounting adjustment to the useful life of data center assets, extending the depreciation period assessment for office buildings and data center structures from 15 to 25 years.
Microsoft stock surged after earnings release. Source: TradingView
Boosted by the dual positives of earnings and guidance, Microsoft's stock surged over 8% in after-hours trading. On the next trading day after the earnings release (July 30), Microsoft stock posted its best single-day performance in eighteen years.
Meta: Revenue Beats But Profits Decline, Uncontrolled Capex Triggers Fiercest Sell-Off
Meta reported earnings on July 29 after the close, receiving the most negative stock reaction of this earnings season. Its core advertising business remained strong, with Q2 revenue of $60.801 billion, up 28% year-over-year, slightly above market expectations of $60.17 billion. Advertising revenue was $59.363 billion, up 27%, with ad impressions growing 14% and average price per ad rising 12%. Ad click-through rates and conversion rates improved following upgrades to AI ranking models. Revenue from the Family of Apps' other businesses surpassed $1 billion for the first time in a quarter, surging 73% year-over-year, mainly from WhatsApp paid messages and subscription revenue.
Changes on the expense side were the first reason for the quarterly profit decline. Total costs and expenses reached $42 billion in Q2, surging 55% year-over-year. Dragged down by this, operating profit was $18.775 billion, down 8% year-over-year, with the operating margin dropping from 43% to 31%. GAAP net income was $15.848 billion, down 14%, with EPS of $6.18, below $7.14 from the same period last year.
What truly triggered the stock sell-off were the capital expenditures and free cash flow figures. Q2 capex was $31.08 billion, while cash flow from operations was $31.86 billion, resulting in free cash flow of just $784 million after offsetting, a plunge of over 90% from $8.54 billion a year earlier. The company also raised the lower end of its full-year 2026 capex guidance from $125 billion to $130 billion and increased its expected tax rate for the remainder of 2026 from 13-16% to 15-17%. CEO Mark Zuckerberg emphasized that selling computing power externally in exchange for short-term profits was a "stupid" move, and that continuously ramping up compute investment was not a gamble but a necessity, implying the company might continue to increase spending.
Evercore ISI analyst Mark Mahaney noted that the lack of forward-looking guidance for 2027 capex and insufficient detail on progress in cutting-edge AI model development from the company were significant factors weighing on the stock.
Meta stock plummeted. Source: TradingView
On the night of the earnings release, Meta's stock plunged over 7% in after-hours trading. Losses widened further before the next day's open. By July 31, the decline hadn't stopped, with the intraday drop once approaching 10%, making it the company with the longest-lasting pullback and largest cumulative decline among the five. Notably, this isn't the first time Meta's stock has been hammered over capex concerns. In its Q1 earnings released on April 29 this year, the company similarly saw its stock crash over 8% after raising its full-year capex guidance, wiping over $100 billion off its market cap in a single day. "Stock sell-off upon raising capex guidance" has become a fixed reaction pattern for Meta over the past two earnings quarters.
Apple: Revenue and Profit Both Hit Record Highs for the Period, But Market Cap Evaporates $300B in a Day
Apple's earnings best exemplify the "divergence between performance and stock price" characteristic of this earnings season. On July 30 local time, Apple reported its fiscal Q3 2026 (ended June 27, corresponding to calendar Q2) earnings. Total revenue was $109.42 billion, up 16% year-over-year, beating market expectations of $108.65 billion. Net income was $29.789 billion, up 27%. Gross margin reached 50.1%, with tariff rebates adding about 2 percentage points. iPhone revenue was $54.25 billion, up about 22%, and Mac revenue was $10.35 billion, up about 29%, both beating expectations. Tim Cook stated in the earnings release that this was Apple's best June quarter in history, with double-digit growth in iPhone, Mac, Services, and every major geographic segment.
So what dragged down the stock? The company expects revenue growth of 9% to 11% year-over-year for the fiscal Q4 ending in September, with the upper end of the range notably below the Wall Street consensus of 12.1%. The Q4 gross margin guidance also dropped from 50.1% this quarter to a range of 47% to 48%. The earnings call cited two major headwinds: first, foreign exchange rate volatility is expected to drag overall revenue growth by about 2.5 percentage points; second, negative impacts from chip and memory supply shortages will expand significantly quarter-over-quarter, affecting the iPhone, Mac, and iPad product lines. Wait times for important computer products like the Mac mini and Mac Studio have already lengthened, directly related to the industry backdrop of sharply rising DRAM and NAND contract prices and persistent shortages in memory chips and computer processors. This guidance signals that the negative impact from supply chain bottlenecks might be more severe and longer-lasting than the market previously anticipated.
Apple stock plummeted. Source: TradingView
Affected by multiple factors, Apple's stock plunged over 8% in after-hours trading, with the maximum drop reaching 8.37%, marking its largest single-day decline since April 2025. The closing price dropped to the $301-$312 range at one point, wiping over $300 billion off its market cap in a single day.
Overall, all five companies beat market expectations on revenue and profits. AI-related businesses, whether cloud computing, data center chips, or enterprise AI tools, maintained growth rates significantly higher than their respective companies' overall growth, indicating that the strength of AI demand shows no signs of slowing down yet.
However, the divergence in stock performance clearly indicates the market's focus has shifted from whether demand exists to free cash flow returns. Google and Meta faced sell-offs after raising capex guidance led to negative cash flow, while Microsoft successfully convinced the market by lowering its capex guidance and promising positive free cash flow. This also suggests that in the next earnings season, how companies explain the pace and return path of their capital expenditures will influence stock prices more than revenue and profit figures themselves.
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