Amazon Cloud Beats Estimates as Meta Ramps Up AI Spend and Powell Vows to Stay at Fed

Amazon exceeded Wall Street expectations in its latest earnings report, driven by robust growth in its cloud computing division, while Meta announced plans to significantly increase spending on artificial intelligence initiatives. These results from two tech giants came alongside mixed outcomes from peers like Microsoft and Alphabet, as investors scrutinize the payoff from massive AI investments. Meanwhile, Federal Reserve Chair Jerome Powell confirmed he will remain at the central bank as a governor after his term as chair ends, amid a divided policy meeting where rates were held steady.

According to Bloomberg reports, Amazon posted the largest cloud sales growth since 2022, fueled by major deals with AI firms including Anthropic and OpenAI. This performance helped the company beat analyst estimates across key metrics, providing a bright spot in an otherwise varied Big Tech earnings season. Alphabet also outperformed, with strong results particularly in its cloud unit, outpacing rivals in AI-driven growth. As reported by Bloomberg analysts Ed Ludlow and Anurag Rana, these beats highlight how cloud and AI demand are propelling some segments forward even as costs mount.

In contrast, Meta's shares dropped in after-hours trading after the company revealed higher-than-expected capital expenditures for the year, tied directly to escalating AI investment needs. Microsoft faced similar headwinds, with its cloud growth slowing despite record spending; shares fell about 5% in extended trading as concerns grew that AI strategies may take longer to yield returns. Bloomberg's Businessweek Daily podcast noted these dynamics, emphasizing investor fears that blockbuster spending on AI infrastructure has not yet translated into proportional revenue surges across the board.

The Federal Reserve's decision to leave interest rates unchanged exposed deepening divisions among officials, with three dissenting against an easing bias amid uncertainties from the Middle East conflict. Powell's announcement to stay on as a governor with a "low profile" ends months of speculation but drew sharp criticism from Treasury Secretary Scott Bessent, who called it a "violation" of Fed norms and traditions. As detailed in Bloomberg economics coverage, four officials voted against the latest FOMC decision, signaling potential shifts in policy outlook.

These developments matter for global markets, as Big Tech's AI spending—now in the tens of billions—could influence inflation pressures and economic growth, areas the Fed is closely watching. Tech-heavy indexes may face volatility if investors demand clearer paths to AI profitability, affecting retirement savings, pensions, and broader consumer tech prices. Asia-Pacific markets, as discussed on Bloomberg's "The Asia Trade," are powering ahead on earnings strength, underscoring the sector's worldwide ripple effects.

Looking ahead, traders will parse upcoming Fed minutes and Powell's post-meeting comments for clues on rate paths, while tech firms face pressure to justify capex in future quarters. Amazon and Alphabet's wins offer optimism for AI leaders, but Meta and Microsoft's stumbles highlight risks if spending outpaces monetization. Powell's continued presence ensures policy continuity, though internal Fed rifts and external critiques could complicate the bank's next moves.