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Investors Favor Alphabet’s AI Spending Over Meta’s Despite Both Beating Earnings Expectations

Despite both Meta and Alphabet surpassing earnings expectations and raising AI spending forecasts, investors reacted differently, with Alphabet’s stock rising 7% while Meta’s fell 7%, highlighting the market’s preference for companies with cloud infrastructure that can monetize AI investments.

On Wednesday, both Meta and Alphabet surpassed analyst expectations in their quarterly earnings, marking their most robust growth in several years. The companies also raised their annual capital expenditure projections, signaling a continued commitment to investing heavily in artificial intelligence infrastructure.

However, Wall Street responded differently to the two tech giants. Alphabet’s stock surged 7% in after-hours trading, whereas Meta’s shares dropped by 7%.

This divergence continues a pattern that has weighed on Meta during much of the generative AI expansion. Unlike Alphabet, Microsoft, and Amazon, which operate vast cloud infrastructure businesses that convert AI investments into revenue, Meta lacks such a division.

Consequently, convincing investors of the return on AI spending is more challenging for Meta CEO Mark Zuckerberg, as the benefits must primarily manifest through higher ad revenue and improved profitability.

All four major tech firms released their quarterly results on Wednesday. While Alphabet, Microsoft, and Amazon reported cloud divisions that outperformed expectations, Meta was the only one among them to see its stock decline.

Leading up to the earnings releases, Alphabet’s stock had climbed 118% over the past year, significantly outpacing Meta’s 21% gain. Amazon rose 40%, and Microsoft increased by approximately 8%.

“Google is outperforming its peers which is well reflected in the current valuation,” analysts at D.A. Davidson wrote in a report after the results, maintaining their neutral rating.

The capital expenditure figures across the board are staggering and continue to grow, partly because companies are spending more on memory due to a global shortage driven by surging AI demand.

Alphabet updated its 2026 capex guidance range to $180 billion to $190 billion, up from its previous estimate of $175 billion to $185 billion. CFO Anat Ashkenazi said the company’s 2027 capex is expected to “significantly increase” from this year’s figure.

The spending forecast was coupled with revenue growth of 20%, the fastest for any quarter since 2022. Cloud revenue soared 63%, and Alphabet said it has a backlog of $460 billion, nearly double where it was last quarter, because of demand for AI infrastructure.

Defending the Spending

Meta upped its capex guidance for the year to between $125 billion and $145 billion, from a prior range of $115 billion to $135 billion, a move the company said, “reflects our expectations for higher component pricing this year and, to a lesser extent, additional data center costs to support future year capacity.”

Similar to when Meta raised its capex forecast in October, Zuckerberg spent time on the earnings call defending the company’s hefty AI spending, pitching it as necessary for future growth while bolstering the core online ad business.

“The trend over the last few years seems clear, that we are seeing an increasing return on the amount that we can improve engagement for people and value for advertisers,” Zuckerberg said. “This encourages us to continue investing heavily in what we expect will provide increasing value over the coming years as well.”

On the revenue side, growth is more impressive than at Google. Sales jumped 33% from a year earlier, marking the strongest period for expansion since 2021.

Zuckerberg said the company is “very focused on increasing the efficiency of our investments,” and is developing custom silicon with Broadcom while investing in a “significant amount of AMD chips to complement the new Nvidia systems that we’re rolling out as well.”

Meta CFO Susan Li told analysts that the company needs to spend big on AI in order to “meet our infrastructure needs and ensure we maximize our strategic flexibility over the coming years.” The company also has to ensure it has enough computing resources to train more AI models, build more products and help its AI agent push for consumers and businesses worldwide, Li said.

She added that Meta’s recent “multi-year cloud deals and our infrastructure purchase agreements” contributed to a $107 billion jump in contractual commitments during the quarter.

Still, investors are waiting to see new revenue streams come to fruition after Zuckerberg spent the past 10 months overhauling his company’s AI strategy and bringing in high-priced talent. Earlier this month, Meta debuted Muse Spark as its first proprietary foundation model.

Alphabet, meanwhile, has been cashing in on its bets, including on homegrown chips called tensor processing units (TPUs), which are increasingly competing with Nvidia’s graphics processing units (GPUs).

CEO Sundar Pichai addressed the momentum in the chip side of the business several times on Wednesday’s call.

“There’s tremendous demand for both AI solutions as well as AI infrastructure, including massive interest in our GPU offerings, as well as TPUs,” he said.

WATCH: Meta shares sliding

Technologies

Passengers and crew foil co-pilot’s apparent attempt to crash FlyDubai flight to Israel

One of the pilots on a FlyDubai flight headed for Israel stabbed the second pilot, according to Israeli Prime Minister Benjamin Netanyahu.

On-duty flight crew and passengers managed to foil a pilot’s apparent attempt to crash a FlyDubai flight, after reports emerged of a fight in the cockpit.

The incident on flight FZ1073 from Dubai to Tel Aviv happened when a co-pilot stabbed a pilot, according to Israeli Prime Minister Benjamin Netanyahu, who praised the victim’s quick thinking.

“Despite being stabbed and seriously injured, he fought back, resisted, opened the cockpit door, and enabled passengers and crew to overpower the attacker — preventing a catastrophic mid-air disaster. He saved the lives of 174 people, including Israeli citizens and other nationals,” Netanyahu wrote in a post on X.

FZ1073 was diverted to the Tabuk airport in Saudi Arabia, the airline said, after being successfully secured and diverted by flight crew.

FlyDubai in a statement said that an “altercation” occurred on the flight deck of the plane, but did not mention a stabbing.

However, the airline added that the underlying reasons and motives for the clash is currently unknown, urging all parties to refrain from speculation.

The injured pilot was identified by Netanyahu as Indian national Smit Machchhar. No details have been released on the identity of the attacker, except that he was being interrogated by Saudi authorities.

The Indian embassy in Riyadh said on X that Machchhar is in a hospital in Tabuk, and is reported to be in stable condition.

The Israeli Prime Minister also identified the passenger who broke into the cockpit as Yaniv Hayun, calling him a “hero” and adding he deserved “a global medal of honor.”

Flight data from tracking site FlightRadar24 showed that the plane had experienced extreme altitude fluctuations before broadcasting a “general emergency” squawk code.

FZ1073 had dropped from over 14,000 feet in just 29 seconds, and FlightRadar24 also added that vertical speeds ranging from approximately -30,000 to +10,000 feet per minute were observed from the transponder data.

For context, vertical speeds during normal operations rarely exceed plus or minus 4,000 feet per minute, it added.

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Technologies

South Korean President Lee Reins In Alaska LNG Project Participation Following Trump’s Endorsement

South Korea’s proposed $200 billion U.S. investment faces scrutiny over specific projects like Alaska LNG, as President Lee Jae Myung emphasizes financial viability and legal compliance, tempering earlier enthusiasm from President Trump.

South Korea’s proposed $200 billion investment in the U.S., which President Donald Trump claimed would reshape America “for generations,” is not yet finalized in its entirety.

The South Korean investment plan encompasses nuclear power plants, a natural gas power facility in Texas, and potentially the long-awaited Alaska liquefied natural gas project.

Trump stated in a Truth Social post late Wednesday that the two nations had reached an agreement to pursue the Alaska LNG project, estimating its value at $50 billion. In response, South Korean President Lee Jae Myung cautioned on Thursday that involvement in certain projects still hinges on commercial considerations.

Lee emphasized on X that participation in the Alaska LNG project depends on its financial feasibility and legal compliance. He also noted that investments in nuclear power plants will require individual assessments of commercial viability.

The U.S.-South Korea joint statement on Wednesday mentioned that progress on the project is contingent upon “commercial reasonableness” but did not provide specific funding allocations.

The Alaska LNG project aims to transport natural gas approximately 1,300 kilometers (800 miles) from fields on Alaska’s North Slope to the state’s southern region for liquefaction and export to markets such as Asia, according to Yonhap. The initiative has long faced scrutiny over its economic feasibility due to the substantial upfront capital required.

Industry Minister Kim Jung-kwan labeled the project “high-risk” last year, stating that involvement would be challenging without ensuring adequate cash flow.

Overall, the investment package includes $22.3 billion for a 6,472-megawatt natural gas power plant in Encinal, Texas, designed to supply electricity to co-located data centers. The project will be spearheaded by developer Related Cos. and U.S. energy company NextEra Energy.

Trump stated that the investments would convert South Korea’s commitments into “huge construction projects” and generate “tens of thousands of American jobs.”

“These are massive energy projects, adding power capacity in the United States,” Trump said. “This is new construction, new manufacturing, and great jobs for American workers.”

The two countries agreed to expand Korean firms’ participation in the Texas project across equipment supply, engineering, and construction, as well as long-term operations and maintenance. The U.S. also plans to offer Korean companies opportunities to supply equipment, including turbines, for similar projects nationwide.

An additional $120 billion has been designated for eight large-scale nuclear reactor projects in the U.S. Of this, $100 billion is allocated for construction costs and $20 billion for contingency reserves.

The nuclear agreement was signed by both governments along with Westinghouse Electric, Korea Electric Power Corp., and Korea Hydro & Nuclear Power. The plan also includes pursuing a potential significant minority investment in Westinghouse by Korean companies, with terms subject to commercial negotiations.

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Technologies

SEC Advances Crypto Custody Rules as Major Legislation Languishes in Congress

The SEC has proposed new crypto custody rules for investment advisers and funds while comprehensive legislation remains stalled in Congress, creating a regulatory pathway for digital asset holdings.

The U.S. Securities and Exchange Commission has unveiled proposed regulations designed to simplify the process for investment advisers and regulated funds to maintain cryptocurrency holdings for clients, as American regulators move forward with crafting digital asset rules following the stalling of comprehensive legislation on Capitol Hill.

The proposal, revealed Thursday, would create a specialized framework governing how registered investment advisers, investment companies, and business development companies maintain custody of crypto assets.

The modifications aim to update decades-old custody requirements and eliminate regulatory obstacles that the SEC says have restricted advisers’ capacity to provide crypto-related investment options.

Under the proposed regulations, crypto assets could be held in self-custody under “certain circumstances,” while state trust companies could also function as custodians for crypto assets belonging to clients and regulated funds.

The changes could also grant regulated funds expanded authority to offer investors crypto-related investment strategies, according to the SEC.

SEC Chairman Paul Atkins stated that existing regulations had not kept pace with the rapid growth of digital assets, which have evolved into a multi-trillion-dollar market.

“Today’s proposal would provide a clear regulatory framework for the custody of crypto assets, giving investment advisers and funds a compliant pathway where none existed before,” Atkins said.

The proposal arrives as U.S. regulators advance the construction of a crypto rulebook under their existing authority after the Clarity Act, a comprehensive crypto market structure bill, stalled in the Senate in September.

This represents another step in the SEC’s broader initiative to reshape the U.S. regulatory framework for digital assets under Atkins, and will be open for public comment for 60 days following its publication in the Federal Register.

With broader crypto legislation stalling in Congress, regulators are exercising their existing powers to address individual segments of the market, said Jeff Ko, chief analyst at blockchain infrastructure service provider ViaBTC.

“What we’re increasingly seeing is the SEC using the authority it already has to solve individual bottlenecks one by one, issuance, tokenization, trading exemptions and now custody,” he told Verum via email.

The changes could also intensify competition among crypto custodians, potentially reducing the cost and complexity of investing in digital assets, he said, adding that institutional custody has historically been concentrated among a relatively small number of providers.

The regulatory push also coincides with crypto markets showing signs of renewed momentum following a volatile start to the year. Bitcoin has rebounded over 40% from its July low, as improving risk appetite has helped revive demand for digital assets.

The recovery follows a prolonged downturn from late 2025 into the first half of 2026.

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