Tech Earnings Recap: Winners, Losers & Big Takeaways
Including Alphabet, Amazon, AMD, Qualcomm & More!
Weekly Recap
This past week wasn’t as eventful as the week prior but access to DeepSeek is beginning to be clamped down on. It has been banned in Texas on government officials’ devices, and the same in Australia, while Italy has banned it outright. The reason is that these entities don’t want China to have a backdoor into sensitive data as although the models are open-source, the DeepSeek platform tracks keystrokes and stores user data. The only way to avoid the data being stored and tracked is by running the models locally or on the cloud and the general user wouldn’t know where to begin with this. Elsewhere in the world of AI, OpenAI released DeepResearch to ChatGPT Pro users. This tool essentially serves as a research assistant by generating research reports. Google’s Gemini also has the same feature at a much lower price. That brings me to the first earnings release I’ll dive into.
Alphabet
Google’s parent company Alphabet operates across several key segments. Google Services includes Search, YouTube, Android, Chrome, Google Play, and its massive advertising business. Google Cloud focuses on cloud computing, AI infrastructure, and enterprise solutions. Beyond its core businesses, Alphabet’s Other Bets division explores cutting-edge technologies like Waymo’s self-driving cars and Verily’s life sciences innovations. Google had a great year in 2024 both performance and innovation-wise. The stock was up ~35% in 2024 reflecting strong performance and investor optimism. Having said that, the earnings release for Q4 2024 disappointed and sent shares lower by ~8%. Let’s have a look into why this happened and also why it isn’t all doom and gloom.
The most relevant figure to look at when it comes to assessing Google’s AI edge is the Google Cloud segment as this is where most of the AI-related revenues occur. In Q4, revenue grew by 30% YoY, 5% less than the September YoY figure. Only 30%! That’s rubbish! These were seemingly the thoughts of many investors as this figure along with an increase in CapEx (which I will touch on later) was the main reason for the selloff. 30% YoY growth is still strong, in 2023 the figure didn’t even get to 30%, but expectations are very high as we can see. Although Google Cloud is not the main driver of profits for Google, it’s growing rapidly, as seen by the annual operating income (operating income is the profit left over after deducting all operating expenses such as salaries, infrastructure etc) growth of ~255%. This highlights that there has been a massive surge in demand for Google Cloud services and with AI adoption increasingly ramping up, I don’t see this slowing down. Therefore the slight decline in YoY revenue growth does not worry me at all.
Looking elsewhere, the numbers were solid. Revenue climbed 12% YoY to $96.5 billion, with Google Services growing 10% to $84.1 billion, fueled by Search and YouTube ads, which continue to dominate. Operating income shot up 31% to $31 billion, with an operating margin expansion of 32%, showing the company is running more efficiently. Net income jumped 28% to $26.5 billion, and EPS surged 31% to $2.15, all strong figures that reinforce Google’s financial stability. Despite the market's reaction, the fundamentals here remain strong, and the company is still firing on all cylinders.
In 2025, Google is set to spend $75 billion in CapEx, coming in higher than analyst estimates. This, alongside the slowdown in Google Cloud revenue growth, didn’t sit well with investors. But what many seem to be missing is that Google needs to expand its infrastructure to support Cloud growth. CFO Anat Ashkenazi made it clear that demand for AI-powered cloud services has outpaced available capacity, the same message that Microsoft has echoed. There simply isn’t enough infrastructure to handle the surge in demand, therefore more data centers and computing power need to be built. While it’s a heavy expense now, it will feed back into future revenue growth. And this isn’t just about AI and Cloud. Expanding infrastructure strengthens Google’s entire ecosystem, including its main cash generator, Google Services.
I remain bullish on Google as in addition to everything it’s doing with AI, they are the leading innovators in Quantum Computing. This will be an entire post within itself so I won’t dive deeper but Google are always at the front of innovation and have an extremely skilled workforce along with a strong balance sheet so they can afford to pour money into new projects. One major headwind to note is the final ruling on Google's antitrust remedies, expected in August. In short, the case focuses on whether Google has illegally maintained its dominance in Search and digital advertising through anti-competitive practices, such as exclusive agreements and default search engine deals.
Looking at the chart, despite a selloff the uptrend remains in place, I think ~$170 would be the worst-case price in the next few weeks unless a tail event occurs which, most of the time, cannot be predicted. Overall, I remain bullish on Google as I feel that they are a great business providing essential contributions to advance technology of all kinds.
AMD
Advanced Micro Devices, a giant in the chip space, has been tumbling lower since March 2024. From the peak of $226, it’s down over 50% and this is mainly due to its position as second to NVIDIA. But not a close second, an immeasurably distant second place. This doesn’t mean that AMD is a bad company, it’s still profitable and has a lot to offer, just not as much as NVIDIA and that’s the main driver of its seemingly never-ending decline since making ATHs. AMD’s business is split into four key segments. Data Center includes EPYC server CPUs and Instinct AI accelerators, AMD’s biggest growth opportunity but also where it lags far behind NVIDIA. Client covers Ryzen CPUs for desktops and laptops. Gaming consists of Radeon GPUs and custom chips for PlayStation 5 and Xbox, keeping it relevant in the console space. Embedded focuses on specialized chips for industrial and automotive use, a steady but less exciting part of the business.
AMD’s Q4 2024 earnings came in strong, with revenue hitting a record $7.7 billion, up 24% YoY, but the stock still traded lower as data center revenue, despite growing 69% YoY to $3.9 billion, missed the expected $4.14 billion. The data center segment was driven by EPYC CPU sales and Instinct AI accelerators. Gaming revenue dropped 59% YoY as the console cycle slowed, weighing on AMD’s overall performance. A key positive, however, was the operating margin improving to 8.1% annually, up from just 1.8% in 2023, showing a clear turnaround after a steep decline from 22.2% in 2021. Whilst AMD is expanding and improving its GPU line, EPYC CPU sales may see weakening as Intel has started a price war on this front. Intel is a struggling company desperately trying to hold onto customers and therefore has slated prices on its Xeon CPUs which directly compete with EPYC. This is a potential headwind for AMD but I don’t see this having a major impact although it’s something to monitor.
AMD’s 2025 outlook is centered around AI momentum and new GPU releases, but there are still hurdles ahead. On the positive side, AI remains the biggest growth driver, with MI300 GPUs ramping ahead of schedule and AI revenue expected to hit $3.5 billion, up from $2 billion in 2024. The upcoming MI325X GPU, launching in the second half of the year, will provide a refresh to AMD’s AI lineup, followed by the MI350 in 2025, keeping AMD competitive in high-performance compute. The client segment continues to perform well, with Ryzen CPUs maintaining strong demand. However, gaming remains weak, as the console cycle slows and demand for new-gen systems declines. While operating margins have improved significantly, AMD still needs to scale AI chip production efficiently to close the gap with NVIDIA, which in all likelihood won’t happen. However, the release of DeepSeek R1 could become very useful to AMD. As the cost of building and adopting AI comes down, the latest, most expensive NVIDIA hardware won’t be necessary. Thus, a cheaper and on-par solution of using AMD’s chips could present itself. Of course, I don’t see NVIDIA being dethroned in the data centre and GPU space, but I do think it may give up some market share to AMD over time. However, I don’t see this happening any time soon.
Along with low operating margins and weaker data centre sales, the chart doesn’t look bullish at all. AMD is also trading at a P/E multiple of ~109x, a ~2x premium over NVIDIA. I personally don’t see the value in trying to catch a falling knife when there are much better-performing companies out there.
Amazon
Although often overlooked in AI discussions, Amazon remains at the forefront of tech despite its strong consumer focus. After having a great year in 2024, I don’t see Amazon slowing down. Amazon operates across four key segments, with Amazon Web Services (AWS) being its most profitable division, dominating cloud computing and AI infrastructure. E-commerce remains its backbone, with online retail, Prime, and a vast logistics network. Advertising is a fast-growing segment, utilising Amazon’s data to compete with Google and Meta. Alexa and Devices cover smart home tech, AI assistants, and consumer hardware like Kindle and Fire TV.
Amazon’s Q4 2024 earnings were solid, but the stock reaction was muted. Net sales came in at $187.8 billion, up 10% YoY, with operating income hitting $21.2 billion, a significant jump from $13.2 billion last year. EPS more than doubled to $1.86, blowing past expectations of $1.58. Despite the strong numbers, Amazon’s Q1 2025 revenue guidance of $151–$155.5 billion fell short of Wall Street’s $158.6 billion estimate, leading to some investor disappointment. The company pointed blame at foreign exchange headwinds being the culprit, but beyond the short-term guidance, Amazon is continuing to scale aggressively in AI and cloud. The AWS segment saw sales grow 19% YoY to $28.8 billion, slightly missing estimates.
While AWS remains the dominant force in cloud computing, competition from Microsoft Azure is intensifying as AI demand surges. For now, AWS remains number one as it expands its AI infrastructure, custom chips, and key partnerships to stay ahead. Trainium is a custom chip designed for AI model training, providing a cost-effective alternative to NVIDIA GPUs, while Inferentia is optimised for efficient AI inference in production. Simply put, this means that AI models run faster and more efficiently when making real-time decisions. AWS is also strengthening its ties with Anthropic, Hugging Face, and Stability AI, ensuring major AI models are trained and deployed on its cloud, reinforcing its competitive edge in the AI race.
In the earnings call, Amazon CFO, Brian Olsavsky mentioned that they expect CapEx to continue at a similar run rate of ~$26b per quarter, bringing estimates for 2025 over $100b. With this being such a large figure, it’s reassuring to see that Amazon’s ROIC (Return on Invested Capital) has been growing every quarter since the end of 2023. Similar to the other cloud businesses, there is a demand-supply mismatch and the only way for this to be met is for the infrastructure to be scaled to never-seen-before levels.
I think Amazon will continue to do well this year. AWS is still the dominant force in the cloud sector, and its heavy investment in AI infrastructure will keep it competitive against Microsoft and Google. The company’s rising return on invested capital also shows that it is deploying resources efficiently, which is great to see given its massive CapEx plans. I’m also interested in Amazon’s growing involvement in robotics, particularly how it’s using automation in fulfilment centers and developing AI-driven robotic systems, which could become a major competitive advantage in logistics and beyond. Looking at the chart below, movements tend to come in waves after periods of consolidation. Over the next few weeks, unless a major tail event occurs, I don’t expect Amazon to trade lower than $200. While entry price matters less for long-term investors, if a Dollar Cost Averaging (DCA) approach is being used, it is generally best to be patient and aim for the lowest possible average cost.
Notable Mentions
Qualcomm
Qualcomm reported a record Q1 FY2025 revenue of $11.7 billion, up 18% YoY, with non-GAAP EPS of $3.41, exceeding expectations. Growth was driven by handsets, automotive, and IoT, with automotive revenue soaring 61% YoY to hit its sixth consecutive record quarter. Qualcomm is pushing deeper into AI and edge computing, emphasizing on-device AI for smartphones, PCs, and IoT devices. The company’s Snapdragon 8 Elite powers Samsung’s new Galaxy S25 series, and its Snapdragon X platform is gaining traction in AI PCs. Despite concerns over Apple’s eventual shift away from Qualcomm’s 5G modems, diversification into automotive, IoT, and AI is helping offset potential losses. I think Qualcomm is well-positioned to capitalise on AI, but it needs to scale its AI and PC segments aggressively to prove it can compete beyond mobile.
Rambus
Rambus specializes in high-performance memory solutions and security technologies, focusing on DDR5, HBM, and cryptographic security IP for AI, cloud, and data centers. The company reported record Q4 product revenue of $73.4 million, up 37% YoY, driven by strong demand for DDR5 memory interfaces. Rambus also secured a patent license extension with Micron through 2029, reinforcing its licensing business. With the increase of AI-driven workloads, Rambus is expanding its DDR5 and HBM memory offerings, introducing industry-first complete chipsets for next-gen MRDIMMs (Multiplexer-Ranked Dual In-Line Memory Module) and RDIMMs (Registered Dual In-Line Memory Module). Looking ahead, it expects Q1 FY2025 revenue between $156 million and $162 million, supported by continued growth in AI memory demand. I think Rambus is well-positioned in the AI-driven memory market, but it needs to continue expanding its product portfolio to stay ahead as competition intensifies.
STM
STMicroelectronics is a European semiconductor company specializing in analog, power, and microcontroller chips, with a strong presence in automotive and industrial markets. Not every chip stock is doing well! The automotive and industrial end market has been in a long slump as a result of the EV market not doing so well. STMicroelectronics reported Q4 revenue of $4.28 billion, down 3.2% YoY, with gross margins at 44.9% and EPS of $1.08, slightly missing expectations. The automotive and industrial end markets showed weakness, reinforcing concerns about slowing demand for power semiconductors. Analysts flagged that pricing pressure in microcontrollers and continued weakness in the automotive sector could weigh on ON Semiconductor, which reports next week. Despite this, the analog market is expected to stabilize, potentially benefiting names like Texas Instruments. This isn’t a name I like, but STMicro’s results give a solid read on the broader semiconductor space, particularly for ON Semi, who report this upcoming week.
Upcoming Earnings
We have another busy earnings week ahead. A few of the key names that I’ll be watching out for are: ON Semiconductor, Astera Labs, Cisco, Applied Materials, Tempus AI, Lattice Semiconductor and more!
I hope this recap was helpful and an enjoyable read. Please feel free to get in contact for any questions!
Disclaimer: This article is for informational purposes only and should not be considered financial or investment advice. The views expressed are my own and based on publicly available information, market trends, and personal analysis. I own Alphabet stock which may change at any time. Readers should conduct their own research and consult a financial professional before making any investment decisions.