In this podcast, Motley Fool analysts Rick Munarriz, Sanmeet Deo, and Tim Beyers:
- Discuss macro takeaways from big tech earnings.
- Dig into the details for the unusual news in each report.
- Make a few reckless predictions of what's to come from big tech.
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A full transcript is below.
This podcast was recorded on Nov.03, 2025.
Tim Beyers: What's the big deal with Big Tech? We're listening to Motley Fool Money. Welcome Fools. I'm your host, Tim Beyers, and with me is longtime Rule Breaker's teammate Rick Munarriz. My super Novady teammate Sanmeet Deo guys, how we feeling today? You good? Caffeinated, I hope?
Rick Munarriz: Doing well.
Sanmeet Deo: Very caffeinated.
Tim Beyers: Absolutely. Very good. Today, we're looking back to look ahead with a review of last week's Big Tech earnings. But first, let's start with any macro themes you both saw from the Big Tech reports. I'll kick us off with a couple of things here. There seem to be three big prevailing themes. I pulled this from our internal Alpha sense tool, relentless scaling, of all of the AI Cloud infrastructure. A big one on this Microsoft will increase total AI capacity by 80% this year and double its data center footprint in two years. That seems large. A bit of legal headwinds here. Apple has an antitrust lawsuit that they're dealing with. Then finally, capital intensity. Boy, is there a lot of capital intensity? Amazon has a plan for 2025 Cash CAPEX guided to 125 billion, and that won't be the end of it. Really? That won't be the end of it. Rick, what have you got for me here? What's going on here?
Rick Munarriz: Basically, you're having this great situation where if you are a Big Tech company, where the rich keep getting richer. You continue to see the Mag seven or in this case, the Big Tech five, whatever you want to call this group, continue to be outpaced the S&P 500, which it's outpacing the Russell 2000. If you're an investor and you were picking, small stocks because you thought, Oh, I got to start small. That's where the money is. It's been completely different. You're seeing like with these big AI deals that are happening, they're just exchanging money among themselves, but they have the means, they have the money, and they have the resources to turn something as simple as AI years ago, into something that's just basically a monster game changing technology today.
Tim Beyers: Sanmeet, how do you see this looking at the Big Tech landscape? What either surprised you or interested you coming out of these mess of earnings reports last week?
Sanmeet Deo: I'm seeing like a bifurcated economy where you have, these big tech companies, spending a lot of money, making a lot of money and really pushing for this AI stuff, and they're in pretty strong positions to do so. But then you have the consumer and consumer discretionary companies that are struggling. You had Chipotle, which is a non tech, talk a little bit about some slowness and some weakness with their consumer. Amazon is talking a little bit about a squeeze consumer in their retail business. While you have the big tech companies thriving and spending, you have the consumer, maybe less so thriving and spending a little less.
Tim Beyers: Big Tech is big, isolated at the moment here.
Rick Munarriz: Yeah, can I argue, Tim, that is a tech company? Because how do they roll those burritos? There's no way all that food fits into a rolled tin fool aluminum foil wrapped burrito. That's magic. That's wizardry.
Tim Beyers: I will tell you, I think that guacamole is biotech in and of itself. I fully agree. Let's move on to the earnings themselves. What we're going to do is focus on some of the outlier things that we saw in each of these reports. Sanmeet, why don't I start with you here on Meta? What really stood out for you?
Sanmeet Deo: I'm really curious to dig in a little bit more on this joint venture with Blue Owl Capital. They announced that they're doing a joint venture to co develop a Louisiana Data Center campus. Some of the structure and the way they're doing this, it's going to be off balance sheet.
Tim Beyers: That before. Exactly.
Sanmeet Deo: That is something that I have experienced at a prior company, whereas I worked. For those you don't know, I worked at Lehman Brothers, and we had off balance sheet mortgage companies. Need I say more.
Tim Beyers: Yeah, that worked out great. I hope there's less to this than it seems. This would be one of those that I'd like to just believe that what we're really going to get is just an interesting joint venture, but I really wish it was on the balance sheet. Rick, let's keep moving here and go on to Alphabet. Alphabet had a heck of a quarter, and investors seem to like it. What did you like or dislike?
Rick Munarriz: I liked the facts. Here's a fear, and I have never shared it with you, Tim or anyone. I kept it internally because I didn't want this to happen, but every time I'm on Google and I put out a search result, I'm starting to get these nice AI responses, giving me the answer I wanted. I'm not clicking on ads. I'm not clicking on sponsored search results. I'm not clicking on anything. I'm not diving into all these companies that have invested in SEO. I tell myself, Well, Alphabet has to feel the pain. They're going to feel this in advertising. They're going to feel this in other place. But they haven't. Again, $100 billion quarter, a record quarter for the third quarter, and this is a year ago, there was some, you know, voting elections related spending on the ad market that could have propped up results. But the company's doing well. It's defying all these things and clearly just another major player in cloud that's really raking it in many different levels.
Tim Beyers: They are saying that backlog for their cloud business was up 82% year over year. That is extraordinary. The backlog is apparently now 10x the current annual Cloud revenue there. Maybe we're going to see some big things from GCP here. Let's move on to Microsoft Sanmeet. What stood out for you here?
Sanmeet Deo: Their other income swung to a $4.1 billion net loss from their stake in OpenAI, and that was surprising. And it's, you know, you see some of the other companies, Amazon, Alphabet, making some money from their investments in Anthropic. Microsoft, which has had a huge stake in OpenAI, has been involved with them for a long time, is not making any money.
Tim Beyers: It's really hard to understand what exactly is going on here. Open AI is in full court press, spend it all as soon as we get it mode, and that is having some tail risk, I guess, for Microsoft. It's a bit surprising. They also absolutely went through the roof with their CAPEX, 34.9 billion. That was up significantly, and about 50% of that spent on GPUs. They have a big checkbook, and they're writing a lot of checks. But, Rick, we mentioned before, we got to this section, Amazon $125 billion. What else can we say about Amazon? This was another amazing quarter for these guys.
Rick Munarriz: Amazing, indeed. When you see, oh, 13% sales growth, that's not very impressive until you realize that three years in a row, they've given us 9%, 12%, 11% growth. These back to back quarters of 13%, it may not seem like a lot, but Amazon is slowly gradually starting to pick up momentum. It's like an old car, that's just starting to pick up speed here. You have the case here where it's international growth. Obviously, it's outpacing US growth was 11%, international a little better. But obviously, AWS, their web hosting business, which is becoming a larger player, growing faster than the e-commerce business quarter after quarter, and more importantly, just margin wise, it is cash cow, the way it makes so much money, that it's helping the whole company. Really a dynamic quarter that really defies the seemingly ho hum top lying growth numbers.
Tim Beyers: This is so interesting. There's two quick things on Amazon that I wanted to add to this, Rick. You make a great point. Amazon reaccelerating is fascinating. Also we just talked about, Sanmeet was talking about the Open AI hit to Microsoft. Anthropic gave Amazon a $9.5 billion one time gain from revaluing that investment. That is extraordinary. Now, that was nonoperating income, but clearly, the market thinks that Anthropic is a whole lot more valuable. But the most fascinating thing I thought was that, for AWS, Amazon decided beginning January of this year to reduce the useful life of their servers and networking gear from six years, the amount of time they used to depreciate their networking and server gear from six years down to five. That is very rare. You almost always see it that those useful lives being extended, not reduced. But that's telling you, I think, that Amazon is going to be spending a lot of money to keep refreshing its gear.
Rick Munarriz: It's not just the workforce that's being reduced in Amazon, is what you're saying?
Tim Beyers: No, not just the workforce.
Rick Munarriz: All right.
Tim Beyers: All right, Sanmeet, take us home with Apple here.
Sanmeet Deo: Oh, if I may say one quick thing about Amazon that I think is sometimes underappreciated with the whole Big Tech stuff is that they're the ones that has the deepest ties to retail and the consumer and the data that they're getting from that and the way they're piecing together some of these different businesses that they have is powered by a lot of that. It's almost like the retail is like a loss leader for all the other businesses that they're doing. I think they're putting together these pieces, and I feel like they're playing 3D chess sometimes.
Tim Beyers: You might not be wrong. It's certainly true that they are exposed to so many areas of the economy, including to the consumer economy, and then they're the biggest participant on the back end in this Big Tech AI, Cloud. They're the biggest player there. They stretch all the way across that value chain. Apple's no slouch, though. Apple is a big, big company. Tell me what you thought about the Apple report.
Sanmeet Deo: Apple it's interesting because tariffs are going to definitely be an interesting part of their business. They do sell some of these phones. Phones is really the biggest business. What I worry about with Apple, which is probably a lot of people worrying about is, they're making commitments to investments, as well, but are they falling behind in the AI race, and how are they going to be able to really capture the fact that everyone's walking around with a device that could have embedded AI that could really be powerful for them. It's something that they could create a service from. Their services business has grown for many, many years. They always had the hardware which no one else really had. Then they added on services, which started to really grow. It's a 100 billion plus annual revenue stream, growing faster than hardware. How are they going to tie everything in?
Tim Beyers: Yeah, we don't have really good insight into what Apple is going to do to get themselves to become a major player in the AI space, everybody else is making really big portal investments, and I really would have expected by now that the Apple AI portal, which really is supposed to be Siri, would be better than it is, but it hasn't gotten there yet. Coming up next, we're going to make some Big Tech reckless predictions. You're listening to Motley Fool Money.
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Tim Beyers: We're back with reckless predictions. We call them reckless predictions because we don't know. We make predictions, but we don't I mean, we're basing this on what we can see and what we can observe at the moment. The whole point of making reckless predictions, and before I go to you on this Rick, I'm going to tea it up this way. The point of making a reckless prediction is to give yourself a frame for how you're going to look at a market. That's what you do a reckless prediction for. You have a sense of what you're looking for. Then when your reckless prediction goes wildly wrong and you see how it went wrong, then you start learning things. It's great when we're right, but it's also OK when we're wrong. Rick, with that, you don't have to be exactly right here, Rick, but give it to me. Go crazy. What's your reckless prediction here?
Rick Munarriz: I'm going to make a prediction that may not seem so reckless, but then I'm going to embed a deeper prediction within it. I think that the Mag seven, which is six tech stocks and a car driving stock that has high in tech, so it's almost a big tech index. Five all five we talked about are part of the big Mag Seven. Will be no more within the next three years. To me, this is an easy prediction because I remember when Fang was a thing, and then Facebook changed its name, and then Google changed its name. The letters didn't work. In the end, you tell someone that wasn't around 10 years ago when Fang was a thing. They may say, Oh, and it's in video. No, it's Netflix. Everything changes over time. I think you're seeing that with the Mag Seven, that it's this whole thing that eventually it's not going to be seven. It'll be a smaller number, a different number. But my bigger prediction within that is that I think within five years, there is going to be a major player in AI that isn't even on anyone's radar right now. No, I don't know who that is. I'm going to take the Easy road out. But I see already that you're seeing I mean, Nvidia, they have an ASML lead in AI, so I'm not going to say someone's going to topple them. But I think it'll be a major player then. You're seeing it happen just this past year alone. The reason why Chinese stocks like Alibaba and Baidu are doing so well is because they're filling a void in China of these AI chips and data centers that needs to be built out while there's trade tensions happening with the US market. Not that I think one of these two will be the big leader, but it wouldn't surprise me if either an international name or maybe an unlikely name that just happens to have a lot of resources. Maybe even the Apple that we were ridiculing earlier on its inability to make it happen that it's now even part of that Google Pixel 10 ad where it's like, the BP, and they're making fun of it for not being able to have a good AI interface. Maybe Apple becomes that major AI play, but I think it'll be unexpected, and I think it'll happen in the next five years.
Tim Beyers: I like it. Sanmeet, what you got?
Sanmeet Deo: I think I have one that might be coming out of nowhere. I talked a little bit about the bifurcated economy. You have the tech companies with their cloud businesses and their corporate business, AI business is doing well. Then you have cautious retail. One of those, which you have Amazon, I think they're about to unify both of those through their long running joke of a cash burning business, Alexa, which, they're rolling out Alexa Plus, which they're calling Ambient AI strategy. I think that might be successfully bridging the gap between consumer enterprise businesses where AI will start managing users' homes, order their groceries, book their services, all powered by AWS AI, and creates a new brand new high margin subscription and services layer. That'll become Amazon's next little big line of business, and it could help them get to a valuation of 4 trillion.
Tim Beyers: That is a big prediction. Mine may be fairly small then in the grand scheme of things here. I'm saying big tech R&D expense will start to scale faster than CAPEX in the next three years. Just to put that in perspective, there are companies that have been nearly doubling their CAPEX over the past couple of years among these big techs. Like, it has been outrageous. Alphabet, for example, I think, was over 80%, just ridiculous. But I think the reason for this is simple. At some point, there's going to be a more pressing need for software driven innovations in a number of areas, a lot of lower level code work is going to be done with AI assistant, but experienced developers are going to get heavily involved, and they will be paid handsomely for the work. My embedded reckless prediction here, which I don't think is really all that reckless, but distinguished AI engineer is going to become a common title among Silicon Valley's Big Tech Elite. If you've been around Silicon Valley and you know anything about that culture distinguished engineer, it's something that, that is the title. If you are a techie in Silicon Valley, becoming a distinguished Ang engineer, one of those big companies. I think distinguished AI engineer is going to become a serious thing, and it's going to pay a lot a lot of money. Coming up next, we're going to preview tomorrow's show. Your listening to Motley Fool Money.
Coming up tomorrow, you will have Emily Flipping, Jeff Santoro, and Jason Hall talking about reformed Rule Breakers. How about that? I mean, I'm fascinated by that title already. Jeff and Jason and Emily are going to be doing an earnings roundup. It's going to be a focused on these reform. Rule Breakers, three different earnings takes for Spotify, Shopify, and a third mystery stock that we're going to let you tune into the show to get the reveal. But be sure you tune in tomorrow for Emily, Jeff, and Jason, and thank you for tuning in today for our Big Tech earnings review. Thanks to my friends Rick and Sanmeet. As always, people on the program may have interest in the stocks they talk about. The Motley Fool may have formal recommendations for or against. Don't buy or sell stocks based solely on here. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers, advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. Four, Rick Munarriz, Sanmeet Deo. Our engineer is Dan Boyd and our producer, Honan, Chuck Balu, Tim Beyers. Thank you for tuning in, Fools. See you again next time. Fool on.
