Q1 results show how the largest ad companies are weathering uncertainty around the Iran war and AI spending

Google posts its second $100 billion quarter thanks to AI: The advertising leader is proving that the tech can drive revenues to offset heavy spending.

Can advertising cover tech’s ballooning AI costs? That question defined big Q1 earnings day for Amazon, Meta, Microsoft, and Google.

On today’s podcast episode, we discuss the three big questions surrounding Google right now: When and how will it monetize AI search? Is it spending too much on AI? Will it reconcile its two full-fledged AI chatbots? And more. Join Senior Director of Podcasts and host Marcus Johnson, along with Principal Analyst Nate Elliott and Senior Director of Content Jeremy Goldman. Listen everywhere, and watch on YouTube and Spotify.

A global Azure and 365 outage hours before earnings revealed the fragility of Microsoft's dominance, briefly disrupting apps and websites worldwide. But its latest earnings demonstrated its unmatched lead in enterprise AI. Azure and other cloud services jumped 40%, powering Microsoft Cloud’s 26% revenue surge to $49.1 billion. Despite the hiccup, Microsoft’s results confirmed AI’s full integration into its business model, with Copilot and Azure fueling recurring cloud consumption—and turning productivity into predictable, high-margin growth.

The news: OpenAI CEO Sam Altman is warning of a growing AI investment bubble. “Are we in a phase where investors are overexcited about AI? My opinion is yes,” Altman said during a dinner with a group of reporters, per The Verge. Still, he emphasized that AI remains “the most important thing to happen in a very long time.” Our take: Altman’s warning about an AI bubble applies to marketers too. The temptation to chase every shiny new AI tool is real, but teams should develop an AI experimentation roadmap with clear outcomes to avoid wasting resources. Pushing vendors for case studies can help maximize budgets.

Recent news of Walmart’s expansion of in-store ads, including audio and product demos, plus The Kroger Co.’s planned roll out of digital ads in the cooler aisle, has intensified the spotlight on the rise of in-store retail media. This fast-emerging segment is perhaps the most critical development in the digitization of the store, retail’s next mega-trend. Physical stores have enormous—and almost completely untapped—potential as the next major media channel, yet US retailers have been remarkably slow to adopt.