AI Giants Report: Why Is Google the Only AI Winner?

The three U.S. AI giants — Microsoft, Google, and Meta — have all released their Q3 earnings, and the market wasted no time in delivering its verdict.

Google’s stock surged nearly 7% after hours, while Microsoft fell 4% and Meta plunged 8%.

So — why was Google the only one to pass the market’s test with flying colors?

Google: The “Honor Student” of AI Earnings

Google demonstrated the power of its dual-engine growth — advertising and cloud — both beating expectations.

Google Cloud revenue rose 34% YoY, topping forecasts of 32%. Its backlog hit $155 billion, up more than 70% YoY, ensuring growth visibility for several quarters.

AI was the core driver — 70% of Google Cloud clients now rely on AI-enabled services.

Meanwhile, YouTube and Search ads both grew 15% YoY, comfortably beating estimates.

This quarter erased concerns that “AI browsers” could threaten Google’s search empire. Instead, Google is actively reshaping itself with AI.

Its Gemini model now counts 650 million monthly active users, processing 7 billion tokens per minute, ranking second behind ChatGPT but ahead of all others. Google also deepened its investment in Anthropic, whose Claude model could become a differentiated competitor in coding.

Most impressively, Google controlled its CapEx discipline — guiding 2026 CapEx to $91–93B, just 8% higher YoY, below expectations.

With strong revenue growth and prudent spending, Google earned its “A+” from Wall Street.

Microsoft: Strong Numbers, Even Higher Expectations

Microsoft’s Azure cloud revenue rose 39% YoY, beating consensus (37%) but missing the most optimistic projections (41%).

Earlier, Microsoft announced a massive OpenAI contract, pushing investor expectations sky-high. So while the report was solid — maybe a 90/100 — the market had priced in perfection.

Copilot now boasts 150 million monthly users, adopted by 90% of Fortune 500 companies, and has made gains in programming, cybersecurity, and scientific health.

However, CapEx soared to $34.9B, well above the $30B estimate, and no future guidance was provided — signaling that the AI arms race continues.

Compared with Google, Microsoft’s spending looked lavish, with less immediate payoff.

Adding pressure, Microsoft recorded a $3.086B GAAP loss this quarter tied to OpenAI — up from $523M last year — implying OpenAI’s own quarterly losses near $15B.

While Microsoft’s exposure is capped, the hit still dampened near-term profit growth.

Meta: A Triple Blow from Costs, Guidance, and Lawsuits

Meta, on the other hand, faced a triple hit — lower guidance, surging costs, and looming legal risks — and its stock sank nearly 8%.

Fundamentally, Q3 wasn’t bad: Ad impressions rose 14%, prices increased 10%, and daily active users reached 3.54B.

But investors were spooked by what came next.

Q4 revenue guidance of $56–59B missed expectations.

Total costs jumped 32% YoY to $30.7B, far outpacing revenue growth.

Operating margin dropped from 43% to 40%, and CapEx surged to $19.37B.

Full-year CapEx was raised from $66B to $70B+, and the CFO warned that 2026 CapEx will be “notably larger.”

Meta is also aggressively hiring AI talent, inflating labor costs.

And the legal overhang is growing: EU regulators may force ad model changes that hurt revenues, while U.S. lawsuits tied to teen social media could cause “significant losses” in 2026.