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As tech giants increase their already breathtaking spending on artificial intelligence, their respective digital advertising businesses have also gained momentum.

Quarterly earnings reports this week from Meta, Amazon, Alphabet and Microsoft all showed healthy revenue on the ads front.

The rising online advertising sales have allayed concerns earlier this year that economic turbulence, amplified by President Donald Trump‘s trade policies, would negatively impact ad budgets.  

“I think the digital ad market is strong,” said Jasmine Enberg, co-founder of Scalable, a creator economy media firm. “I think this economic instability and volatility is kind of priced in for a lot of people at this point; sort of seems to be the status quo.”

Meta topped its rivals for the quarter with the fastest ad-related sales growth.

The company’s total third-quarter revenue, of which 98% is derived from online ads, jumped 26% year-over-year to $51.24 billion, the company’s highest sales since the first quarter of 2024.

Revenue in Amazon’s online ad unit soared 24% year-over-year to $17.7 billion, representing a faster growth rate than the company’s AWS cloud computing unit, which saw sales rise 20%.

CEO Andy Jassy highlighted on Amazon’s earnings call that the company is continuing to expand its ad-specific demand-side platform to more third-party apps and sites.

“You look at some of the partnerships that we’ve done, the Roku partnership gives us the largest connected TV footprint in the U.S.,” Jassy said. “And you layer on top of that what we’ve recently done in providing our DSP customers the opportunity to integrate with the ad inventory in Netflix and Spotify and SiriusXM, it’s powerful.”

Andy Jassy, chief executive officer of Amazon.com Inc., speaks during an unveiling event in New York, US, on Wednesday, Feb. 26, 2025.

Michael Nagle | Bloomberg | Getty Images

Alphabet’s overall advertising sales for the third quarter came in at $74.18 billion, a 13% increase from $65.85 billion a year ago. Third-quarter online ad sales for YouTube rose 15% to $10.26 billion.

Microsoft’s search and news advertising unit brought in $3.7 billion in the company’s fiscal first quarter, a 14% increase from the $3.2 billion it recorded the previous year.

Even if there’s been some pullback in ad budgets due to economic uncertainty, it’s likely that companies shifted some of that spending from traditional businesses like newspapers to digital ad platforms, said Jeremy Goldman, senior director of content at Emarketer.  

“I think what could be happening is more of a no-brainer,” Goldman said. “To put your money in social, and to put your money in retail media and to put your money in search ad spending.”

It wasn’t just the megacaps that showed hefty online ad growth this week.

Reddit on Thursday reported a 68% jump in third-quarter sales, soaring past analyst estimates. The company said global daily active uniques grew 19% year-over-year to 116 million, surpassing estimates of 114 million.

Snap and Pinterest are scheduled to report results next week.

Going big on AI

The tech giants all made clear that they don’t see any broader economic concerns that would warrant a reduction in their AI spending, and instead lifted their guidance for capital expenditures, despite concerns of a bubble.

Alphabet, Meta, Amazon and Microsoft collectively expect capex spending above $380 billion this year, which is still a fraction of the $1 trillion worth of data center and cloud computing deals that OpenAI has recently announced with its partners like Nvidia, Oracle and Broadcom.

But while investors cheered Amazon and Google, they were less thrilled with Microsoft, and especially Meta.

The Facebook parent’s stock tanked 11% on Thursday after the company said it would raise the low end of its capex guidance to between $70 billion and $72 billion from the prior range of $66 billion to $72 billion.

Oppenheimer analysts downgraded Meta stock to the equivalent of a hold from buy, because they said it’s less obvious how the social media company will benefit from its AI investments relative to its big tech rivals that also operate cloud computing services.

“Significant investment in Superintelligence despite unknown revenue opportunity mirrors 2021/2022 Metaverse spending,” the Oppenheimer analysts wrote, contrasting the company’s big AI spending related to its Superintelligence Labs to its money-losing Reality Labs division, which makes virtual reality and augmented reality technologies.

Wall Street backs AI winners, and Meta’s not one of them this quarter

Susan Li, Meta’s finance chief, said Wednesday during a follow-up earnings call that it’s important for the company to invest in AI-related data center and third-party cloud computing services or risk falling behind, echoing similar comments made by CEO Mark Zuckerberg.

“The highest priority for the company is investing our resources to position ourselves as a leader in AI,” Li said. “That means that I think for the immediate period of time ahead of us, we could see some financial pressure during which our operating profit could be lumpy.”

Meta has continued to point to how its AI investments are improving its online advertising business, but it’s having a more difficult time showing how that spending will benefit the company in the future, Enberg said.

“I think part of that is that we’ve heard the story now quarter after quarter that it is able to integrate AI into its ad business and use that as a growth engine,” Enberg said.  “What comes next is harder to articulate, and far less tangible for investors and other people who follow the space.”

Still, Meta is experiencing some growth in new products like the Meta AI app that contains the Vibes AI-powered short video service, Goldman said.

The company can also still expand more into subscriptions or even potentially offer enterprise AI services to sell to corporations, which is “an area that they haven’t played at all,” he said.

For now, Meta’s digital advertising unit remains its core business, and just like previous quarters, it’s unclear how the economy will impact ad budgets.

With the holiday season approaching, all eyes will be focused on whether the lingering economic concerns or tariff-related price hikes lead to consumers curbing their spending, which could impact corporate marketing campaigns.  

“The next test will be when we get to the Black Friday numbers,” Goldman said. “Are those going to be below expectations?”

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OpenAI to acquire Neptune, a startup that helps with AI model training

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OpenAI to acquire Neptune, a startup that helps with AI model training

OpenAI CEO Sam Altman attends an event to pitch AI for businesses in Tokyo, Japan February 3, 2025.

Kim Kyung-hoon | Reuters

OpenAI has entered into a definitive agreement to acquire Neptune, a startup that builds monitoring and de-bugging tools that artificial intelligence companies use as they train models.

Neptune and OpenAI have collaborated on a metrics dashboard to help teams that are building foundation models. The companies will work “even more closely together” because of the acquisition, Neptune CEO Piotr Niedźwiedź said in a blog.

The startup will wind down its external services in the coming months, Niedźwiedź said. The terms of the acquisition were not disclosed.

“Neptune has built a fast, precise system that allows researchers to analyze complex training workflows,” OpenAI’s Chief Scientist Jakub Pachocki said in a statement. “We plan to iterate with them to integrate their tools deep into our training stack to expand our visibility into how models learn.”

OpenAI has acquired several companies this year.

It purchased a small interface startup called Software Applications Incorporated for an undisclosed sum in October, product development startup Statsig for $1.1 billion in September and Jony Ive’s AI devices startup io for more than $6 billion in May.

Neptune had raised more than $18 million in funding from investors including Almaz Capital and TDJ Pitango Ventures, according to its website. Neptune’s deal with OpenAI is still subject to customary closing conditions.

“I am truly grateful to our customers, investors, co-founders, and colleagues who have made this journey possible,” Niedźwiedź said. “It was the ride of a lifetime already, yet still I believe this is only the beginning.”

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Micron stops selling memory to consumers as demand spikes from AI chips

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Micron stops selling memory to consumers as demand spikes from AI chips

A person walks by a sign for Micron Technology headquarters in San Jose, California, on June 25, 2025.

Justin Sullivan | Getty Images

Micron said on Wednesday that it plans to stop selling memory to consumers to focus on meeting demand for high-powered artificial intelligence chips.

“The AI-driven growth in the data center has led to a surge in demand for memory and storage,” Sumit Sadana, Micron business chief, said in a statement. “Micron has made the difficult decision to exit the Crucial consumer business in order to improve supply and support for our larger, strategic customers in faster-growing segments.”

Micron’s announcement is the latest sign that the AI infrastructure boom is creating shortages for inputs like memory as a handful of companies commit to spend hundreds of billions in the next few years to build massive data centers. Memory, which is used by computers to store data for short periods of time, is facing a global shortage.

Micron shares are up about 175% this year, though they slipped 3% on Wednesday to $232.25.

AI chips, like the GPUs made by Nvidia and Advanced Micro Devices, use large amounts of the most advanced memory. For example, the current-generation Nvidia GB200 chip has 192GB of memory per graphics processor. Google’s latest AI chip, the Ironwood TPU, needs 192GB of high-bandwidth memory.

Memory is also used in phones and computers, but with lower specs, and much lower quantities — many laptops only come with 16GB of memory. Micron’s Crucial brand sold memory on sticks that tinkerers could use to build their own PCs or upgrade their laptops. Crucial also sold solid-state hard drives.

Micron competes against SK Hynix and Samsung in the market for high-bandwidth memory, but it’s the only U.S.-based memory supplier. Analysts have said that SK Hynix is Nvidia’s primary memory supplier.

Micron supplies AMD, which says its AI chips use more memory than others, providing them a performance advantage for running AI. AMD’s current AI chip, the MI350, comes with 288GB of high-bandwidth memory.

Micron’s Crucial business was not broken out in company earnings. However, its cloud memory business unit showed 213% year-over-year growth in the most recent quarter.

Analysts at Goldman on Tuesday raised their price target on Micron’s stock to $205 from $180, though they maintained their hold recommendation. The analysts wrote in a note to clients that due to “continued pricing momentum” in memory, they “expect healthy upside to Street estimates” when Micron reports quarterly results in two weeks.

A Micron spokesperson declined to comment on whether the move would result in layoffs.

“Micron intends to reduce impact on team members due to this business decision through redeployment opportunities into existing open positions within the company,” the company said in its release.

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Microsoft stock sinks on report AI product sales are missing growth goals

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Microsoft stock sinks on report AI product sales are missing growth goals

Microsoft: Have not lowered sales quotas or targets for salespeople

Microsoft pushed back on a report Wednesday that the company lowered growth targets for artificial intelligence software sales after many of its salespeople missed those goals in the last fiscal year.

The company’s stock sank more than 2% on The Information report.

A Microsoft spokesperson said the company has not lowered sales quotas or targets for its salespeople.

The sales lag occurred for Microsoft’s Foundry product, an Azure enterprise platform where companies can build and manage AI agents, according to The Information, which cited two salespeople in Azure’s cloud unit.

AI agents can carry out a series of actions for a user or organization autonomously.

Less than a fifth of salespeople in one U.S. Azure unit met the Foundry sales growth target of 50%, according to The Information.

In another unit, the quota was set to double Foundry sales, The Information reported. The quota was dropped to 50% after most salespeople didn’t meet it.

In a statement, the company said the news outlet inaccurately combined the concepts of growth and quotas.

Read more CNBC tech news

“Aggregate sales quotas for AI products have not been lowered, as we informed them prior to publication,” a Microsoft Spokesperson said.

The AI boom has presented opportunities for businesses to add efficiencies and streamline tasks, with the companies that build these agents touting the power of the tools to take on work and allow workers to do more.

OpenAI, Google, Anthropic, Salesforce, Amazon and others all have their own tools to create and manage these AI assistants.

But the adoption of these tools by traditional businesses hasn’t seen the same surge as other parts of the AI ecosystem.

The Information noted AI adoption struggles at private equity firm Carlyle last year, in which the tools wouldn’t reliably connect data from other places. The company later reduced how much it spent on the tools.

Read the full story from The Information here.

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