Microsoft and Alphabet officially kicked off mega-cap earnings in the US on Tuesday afternoon.

To (re)state the obvious, 2023’s equity rally is almost entirely a function of re-rating and monumental gains for America’s tech titans, which raises the stakes for the companies whose products and services are (somewhat unfortunately) synonymous with life in the 21st century.

Jumping straight to what mattered most on Tuesday, Azure growth at Microsoft was 27% on a constant currency basis, and the company said growth should be between 25% and 26% in fiscal Q1.

The ongoing deceleration isn’t a surprise, and the results looked to be consistent with the company’s outlook from April.

That said, I’ve learned not to speculate on how markets will trade the number. The reaction is all about the guide, and it’s not always obvious why investors do or don’t like what they hear from Amy Hood on the call.

A week ago, BofA upgraded Microsoft on ostensible upside from Azure tied to A.I. “Azure is gaining share in the public cloud as CIOs view the platform as the leading A.I. offering,” the bank said. A few days later, UBS suggested global A.I. demand could reach $300 billion in 2027, up tenfold from 2022. That’d make A.I. “one of the fastest-growing segments within global tech,” the bank remarked.

Satya Nadella (bless him) talked up the company’s A.I. ambitions — because what else is he supposed to do? He’s $13 billion into Sam Altman’s Terminator startup.

“Organizations are asking not only how — but how fast — they can apply this next generation of A.I. to address the biggest opportunities and challenges they face,” Nadella said. “Safely and responsibly,” he quickly added.

Microsoft beat on the top line. $56.19 billion in revenue snuck past the $55.5 billion consensus. The 8.3% YoY increase was the briskest in four quarters.

Excluding the FX impact, revenue growth was 10%.

Nadella pounded the table. He knows what people want to hear. “We remain focused on leading the new A.I. platform shift, helping customers use the Microsoft Cloud to get the most value out of their digital spend, and driving operating leverage,” he went on.

Microsoft’s net income last quarter was $20.1 billion. Profits were up between 20% and 23%, depending on whether you strip out the currency effects. EPS beat pretty handily.

Every business topped revenue expectations. Personal computing revenue was $13.91 billion (versus $13.6 billion expected), overall cloud revenue was $23.99 billion (versus $23.8 billion expected) and productivity sales were $18.29 billion (versus consensus of $18.1 billion).

Cloud revenue should be $23.3 billion to $23.6 billion this quarter, Microsoft said later. Growth from A.I. sales will be “gradual,” according to Hood, who put Azure OpenAI customers at 11,000. Azure was more than half of cloud sales in FY2023.

Hood called last quarter “a solid close to the fiscal year.” Again, it all hangs on how the market interprets the Azure guide and the rest of the outlook.

Alphabet, meanwhile, turned in what looked like a strong showing. Revenue of $74.6 billion easily topped estimates.

7.1% YoY top-line growth was the best since Q2 of 2022. On a constant currency basis, sales were up 9%.

Pretty much everything beat. Ad revenue of $58.14 billion was better than the $57.45 billion consensus expected and cloud revenue of $8.03 billion was $200 million ahead of estimates. Profit in the cloud business was double estimates. YouTube ad revenue of $7.67 billion topped the Street’s $7.41 billion projection.

Operating income was $21.84 billion, nearly $2 billion better than expected. The ex-TAC print was $62.07 billion. Consensus was $60.3 billion.

Like Nadella, Sundar Pichai went on about A.I. Google is a leader in the space, he insisted, and the company’s “excellence in engineering and innovation are driving the next evolution of Search.”

Ruth Porat who, starting in September, will be CIO and President as well as CFO, touted “accelerat[ing] revenue growth in both Search and YouTube, as well as momentum in Cloud.”

You get the idea. It’s just big numbers. Every quarter for mega-cap US tech (even the “bad” ones) is just another compendium of huge numbers.

These figures are too large for humans to process. We can estimate what they “should” be for a given period, and then compare what they actually are to our estimates, but we can’t really conceptualize of what it means to haul in $74.6 billion (or $56.2 billion) in the space of three months.

These companies are doing fine. Sometimes, I don’t know why we even bother requiring them to report. If you want to know how they’re doing, just ask yourself how many times you’ve interacted with one of their products or services in the past 24 hours. Then multiply that by 90 and extrapolate to the entire civilized world.