GOOGL earnings read through to > AMZN, META, MSFT

Google just told us in their earnings yesterday what we should be expecting when Amazon, Meta, and Microsoft report next week. I'm Paulina Lego, CNBC stock market reporter, let's break it all down. Alphabet's earnings were actually really impressive. Google Cloud's growth accelerated, and its backlog also grew, which shows that there is demand for its cloud services. In addition to that, search advertising also performed very well, showing that its AI tools in its ads business is performing, they're in high demand. So what's the problem here? Well, in order to keep up with all of these services, Alphabet had to raise its, uh, capital expenditures guidance, which is basically, geared towards spending on all this AI related infrastructure. Wall Street didn't like that. Alphabet decided to increase its cap X guidance, especially since this quarter they had negative free cash flow. The stock fell about 7% today the day after the company reported earnings. This tells us two things. First, AI demand is absolutely real. Companies are still buying cloud services, AI related infrastructure. Second, meaning that demand is very expensive. That's why Alphabet's earnings matter so much for Meta, Microsoft, all the hyper scalers. If Google is spending more, Wall Street is asking, will Amazon Web Services keep pouring money into their AI related services? Will Microsoft have to do the same? What about Meta? They're not even in the cloud business yet. They said they want to build out a cloud business, are they going to have to keep on hiking that capital expenditures? That cap X figure is the metric that investors are hyper focused on this week. Investors are asking, how much spending needs to happen in order for these companies to see a payout. That is the huge overhang that is over these megacaps next week.