Larry Dignan

Ever since Microsoft reported its fiscal third quarter earnings I've been stuck on one word: Eval-max. Eval-max? What?!?

Microsoft CEO Satya Nadella said the following (emphasis mine):

"It was a record third quarter powered by the continued strength of Microsoft Cloud, which exceeded $54 billion in revenue, up 29% year-over-year. Our AI business surpassed $37 billion ARR, up 123%. We are at the beginning of one of the most consequential platform shifts that will change the entire tech stack as agents proliferate and become the dominant workload. This will drive TAM expansion and change the value creation equation across the entire economy. To capture this opportunity, we are executing against 2 priorities. First, we are building the world's leading cloud and AI infrastructure for agentic computing era. Second, we are building high-value agentic systems across core domains such as productivity, coding and security. These 2 layers reinforce each other, and we are focused on driving competitive value and differentiation for customers across each so that they can eval-max their outcomes."

Max could become the new "super." All you have to do is attach it to every word and you'll sound ___. I'll leave the blank to you.

Earnings to know after the bell.

• Storage remains hot as SanDisk and Western Digital topped estimates. SanDisk's fiscal third quarter earnings of $23.03 a share crushed estimates on revenue of $5.95 billion, up 97% from a year ago. Data center revenue was up 233% from a year ago. Fourth quarter revenue will be between $7.75 billion to $8.25 billion.
• Western Digital's third quarter also shined with earnings of $8.20 a share on revenue of $3.34 billion, up 45% from a year ago. Fourth quarter revenue will be about $3.65 billion.
• Atlassian eased SaaS fears with better than expected third quarter results. The company reported a third quarter net loss of $98.4 million, or 38 cents a share, on revenue of $1.79 billion, up 32% from a year ago. Non-GAAP earnings in the third quarter were $1.75 a share. Atlassian projected fourth quarter revenue of $1.653 million to $1.661 million. Shares surged in afterhours trading.
• Rivian's first quarter was notable not because of its vehicle production (10,236), but because its software and services revenue was $473 million out of a total of $1.38 billion. Software and services revenue was up 49% from a year ago courtesy of vehicle electrical architecture and software development services as well as vehicle repair and maintenance. Rivian counts VW as a big investor.

Qualcomm shares surged on its first quarter earnings report based on potential data center and AI inference momentum.

In the you can't make this up department, OpenAI outlined how GPT-5.1 and later models became fascinated with goblins, gremlins and other creatures. The short version is that OpenAI created a "nerdy" persona that ran with the goblin and gremlin theme.

PayPal is reorganizing into a checkout division led by PayPal, a consumer financial services unit led by Venmo and a payment services and crypto division that'll include Braintree.

The new approach, laid out by new CEO Enrique Lores, is notable since it may signal a Venmo spinoff in the future. There were a bunch of executive moves too.

Meta released its first quarter results and overall they were strong with revenue up 33% from a year ago. As usual, Meta said it will spend more money on AI infrastructure. The company said 2026 capital expenditures will be between $125 billion to $145 billion, up from the $115 billion to $135 billion forecast last quarter.

Here's the problem. Unlike Google, Amazon and Microsoft, Meta has to monetize AI through advertising. It doesn't have a cloud business where it can sell capacity to enterprises.

Some initial takeaways on cloud earnings all hitting at the same time.

Google Cloud is thriving as an AI layer and TPU sales are strong. The integrated AI stack pitch is working well. Things are going so well that I don’t sweat the company raising its capex outlook again. Alphabet is getting returns. Annual revenue run rate for Google Cloud now $80 billion.

• Google Cloud revenue growth hits 63% in Q1 to $20 billion

AWS has a big base and accelerating growth. You can quibble about 28% growth missing whisper numbers, but hey it’s a $150 billion annual revenue run rate.

• AWS growth accelerates 28% in Q1

Microsoft Cloud is consistent, growing and almost boring. That’s not a bad thing. Microsoft Azure revenue was up 40% in the fiscal third quarter.

• Microsoft Azure revenue up 40% in fiscal Q3

Most of the MAG 7 reports tonight as Alphabet, Amazon, Meta and Microsoft all report earnings. I'll be focused on the cloud hyperscalers.

• Alphabet is expected to report non-GAAP first quarter earnings of $2.63 a share on revenue of $107.03 billion.
• Amazon is expected to report first quarter earnings of $1.64 a share on revenue of $177.17 billion.
• Microsoft is expected to report fiscal third quarter non-GAAP earnings of $4.06 a share on revenue of $81.43 billion.

For all three companies, capital expenditures will be closely scrutinized as will revenue growth in cloud units. All three companies have shares that have delivered strong gains in the last month. For instance, Amazon and Alphabet are up 30% and 27% in the last month, respectively. Microsoft has surged 17% in the last month.

Those gains mean there's little margin for error and a high likelihood of sell the news.

• AWS launches Amazon Quick, Connect family of business apps, OpenAI managed agents
• Microsoft adds slew of AI agents in Dynamics 365 Contact Center, Sales, Customer Insights
• OpenAI goes multi-cloud in amended deal with Microsoft
• Google Cloud Next 2026: A look at the big themes

Nvidia delivered the latest addition to its Nemotron model family. The company launched Nvidia Nemotron 3 Nano Omni, an open multimodel model designed for AI agents using video, audio, image and text. Nvidia said a host of software companies including Palantir, DocuSign, Infosys and Oracle are evaluating the model.

• Nvidia Nemotron: Much needed open-source model champion in US
• Nvidia launches Nemotron 3 open models to enable multi-agent systems
• Nvidia GTC 2026: We're a software company too
• Why enterprise AI leaders need to bank on open-source LLMs

Seagate's third quarter results were a blowout as revenue of $3.11 billion was up 44% from a year ago. Net income of $934 billion was up 129% from a year ago.

This slide says it all. AI means storage...lots of it.

Otter.ai launched the Conversational Knowledge Engine in a move that aims to expand beyond being an AI notetaker. The company also launched an expanded model context protocol server, AI Chat and Otter for Desktop. According to Otter.ai, the Conversational Knowledge Engine is designed to bring together decisions, context and intent embedded in conversational data. The company said:

"There has never been a system of record for what people actually say during meetings, which has driven Otter.ai's strategic evolution into a new category. The Conversational Knowledge Engine will be as fundamental as CRM in capturing customer data, HRIS for employee data, and ERP for financial data."

That's a heady idea, but Otter.ai can fill in a lot of context gaps. I'm a longtime Otter.ai customer and can attest that the upgraded AI Chat is way better than before. Otter.ai's Conversational Knowledge Engine is aimed at sales, marketing, recruiting and product management.

We'll loop back on Otter.ai's plans when we get a more fleshed out briefing.

SAS held its Innovate conference and outlined a series of updates. Here’s the roundup of announcements.

• SAS AI Navigator to bring order to AI chaos
• SAS expands SAS Viya with governed AI assistants and agentic AI capabilities
• SAS aims AI agents at industry’s toughest challenges
• SAS survey: Industry leaders on the quantum AI cusp
• Liverpool FC and SAS will deliver more personalized, real-time digital fan experiences with AI
• SAS at 50 years: Built on trust, shaping the future of AI
• SAS advances its AI-ready data management foundation for industry agents and automation, with governance built-in
• Expanded agentic AI capabilities coming to SAS Customer Intelligence 360