JPMorgan Lifts Amazon, Alphabet Targets as AI-Fueled Earnings Blow Past Estimates

Big Tech kicked off earnings season with a bang, and Wall Street is taking notice. JPMorgan analyst Doug Anmuth raised his price targets on Alphabet (GOOGL) and Amazon (AMZN) Friday morning, pointing to explosive growth in cloud computing and artificial intelligence that crushed consensus forecasts. Both stocks rallied sharply in pre-market trading, with Alphabet surging 7.5% and Amazon gaining nearly 3%.

Anmuth, a five-star-rated analyst according to TipRanks, lifted his GOOGL target to $460 from $395 while keeping a Buy rating. For Amazon, the target moved to $330 from $280, also with a Buy rating. The upgrades came after both companies reported first-quarter results that showcased how aggressively they are converting AI investments into revenue.

Alphabet reported earnings per share of $5.11, an 82% jump from a year earlier, on revenue of $109.9 billion — up 22% and marking its 11th straight quarter of double-digit growth. Operating income climbed 30% to $39.7 billion. The standout was Google Cloud, where revenue surged 63% to surpass $20 billion for the first time, driven by AI workloads. Chief Executive Officer Sundar Pichai told analysts that demand is so strong the company is hitting near-term compute constraints. “If we could meet demand, our cloud revenue would have been even higher,” Pichai said on the earnings call. The cloud backlog nearly doubled from the prior quarter to over $460 billion.

Pichai also pointed to the rapid adoption of Gemini, Google’s flagship AI model, which now processes more than 16 billion tokens per minute. Paid subscriptions across Google’s AI-powered services reached 350 million users. Search revenue grew 19% in the quarter, while YouTube advertising came in at $9.88 billion, slightly below the $9.97 billion consensus.

Alphabet’s capital spending is racing to keep pace. First-quarter capex hit $35.7 billion, up from $17.2 billion a year ago. The company raised its full-year 2026 capex guidance to a range of $180 billion to $190 billion, up from $175 billion to $185 billion previously. Chief Financial Officer Anat Ashkenazi said 2027 spending will be “significantly higher” than 2026. To help fund the buildout, Alphabet issued senior unsecured notes that raised roughly $31.1 billion and completed more than $33 billion in acquisitions.

Amazon delivered its own blockbuster. Net sales rose 17% to $181.5 billion, ahead of the $177.2 billion consensus. Earnings per share came in at $2.78, crushing the $1.62 estimate. The company posted a record operating margin of 13.1%, generating $23.85 billion in operating income. Amazon Web Services was the engine, with revenue jumping 28% to $37.6 billion — its fastest growth in 15 quarters.

Anmuth sees that momentum accelerating. He projects AWS growth of 32% in 2026 and 30% in 2027, with potential for upside given the swelling backlog. Much of that optimism rests on Amazon’s custom silicon strategy. The company said its chip business has crossed a $200 billion annualized revenue run rate, growing at triple-digit rates. Over the past 12 months, Amazon deployed more than 2.1 million AI chips, with over half being its in-house Trainium processors. OpenAI has committed to using roughly 2 gigawatts of Trainium compute through AWS infrastructure, while Anthropic will get access to up to 5 gigawatts of Trainium resources.

“Many investors are still underestimating how valuable Amazon’s chip strategy could be for future AWS growth and long-term profits,” Anmuth wrote. He raised his 2026 and 2027 sales estimates by around 2% to 3%, operating income forecasts by 11% to 12%, and GAAP earnings per share projections by 7% to 12%.

Amazon’s second-quarter outlook also topped expectations. The company guided for net sales between $194 billion and $199 billion, with operating income of $20 billion to $24 billion. Management noted that Prime Day will fall in the second quarter, providing an additional revenue tailwind.

The broader Big Tech earnings wave produced a mixed picture beyond Alphabet and Amazon. Microsoft (MSFT) reported fiscal third-quarter revenue of $82.89 billion, up 18%, and earnings per share of $4.27, both above estimates. Azure and other cloud services revenue grew 39%, slightly ahead of the 38.2% consensus. Commercial cloud revenue hit $54.5 billion. But shares dipped in after-hours trading after capex growth slowed to 49% year-over-year, down from 66% in the prior quarter and below the roughly 65% analysts had expected. CEO Satya Nadella said the company’s AI business annualized revenue run rate rose 123% from a year ago.

Meta Platforms (META) posted a strong quarter on the surface — revenue of $56.31 billion, up 33%, and earnings per share of $10.44, both beating forecasts. But the stock tumbled more than 7% in after-hours trading as the company raised its full-year capex guidance to $125 billion to $145 billion, up from a prior range of $115 billion to $135 billion. First-quarter capex reached $19.84 billion. CEO Mark Zuckerberg described the period as a “milestone” quarter and said Meta is on a path to deliver personal superintelligence to billions of people. Still, investors appeared spooked by the accelerating spending trajectory and its implications for free cash flow and shareholder returns.

Qualcomm (QCOM) beat expectations with adjusted earnings per share of $2.65 on revenue of $10.6 billion, but its forward guidance disappointed. The chipmaker forecast next-quarter adjusted EPS of $2.10 to $2.30, below the $2.43 consensus, with revenue of $9.2 billion to $10 billion against a $10.26 billion estimate.

The earnings deluge landed against a backdrop of cautious messaging from Federal Reserve Chair Jerome Powell. Speaking just before the reports hit, Powell acknowledged that geopolitical tensions — specifically with Iran — are pushing short-term inflation higher through rising oil prices. He reiterated the central bank’s commitment to the 2% inflation target and notably avoided any language that would signal a rate hike, suggesting rates are likely to remain steady for the foreseeable future.

According to TipRanks, the analyst consensus rates both Alphabet and Amazon as Strong Buys, with average price targets implying roughly 10% upside from current levels. Anmuth’s revised targets suggest even more room to run — approximately 17% for GOOGL and 15% for AMZN based on pre-market prices.

The first-quarter results reinforce a central theme: hyperscalers with deep pockets and established cloud platforms are pulling ahead in the AI race. Alphabet and Amazon are converting capital spending into accelerating revenue faster than many on Wall Street anticipated. The question now is whether supply constraints and the sheer scale of investment required will test investor patience in the quarters ahead.