20VC x SaaStr: The Most Aggressive Quarter in American Capitalism, Palantir’s Rule of 145, and Why Brian Armstrong Just Killed the Manager-of-Managers

With Harry Stebbings, Jason Lemkin, and Rory O’Driscoll

Come meet Rory live at SaaStr AI Annual.Rory O’Driscoll will be doing a live AMA on stage at SaaStr AI Annual on May 12 in the SF Bay Area. Bring your hardest questions on public B2B markets, AI capex, the SaaS reacceleration, and where the puck is going for venture in 2026. See you there.

This was the Super Bowl of earnings.

Five of the seven largest market cap companies on the planet reported in the same week. $540 billion in combined quarterly revenue. $700 billion in 2026 AI capex. And the punchline of the whole thing, which Rory borrowed from Evan Armstrong’s Substack: this is the most aggressive quarter in American capitalism.

**Google ran away with it.**Cloud backlog nearly doubled to $462 billion, which is now larger than Alphabet’s entire 2025 revenue.Microsoft caught a downgrade despite $37B in AI ARRbecause excluding the AI initiative, the rest of the business is flat.Amazon got a thumbs upon AWS reacceleration.Meta got crushed for $145B in capexwith no clear AI revenue line attached.And Apple quietly punched out a great quarter with no AI story at all and went home. The top of the distribution is pulling away from everyone else. That’s the macro frame for everything else this week.

**Then Palantir reported on a separate planet entirely. **

**RPO up 134% to $4.45 billion. Rule of 40 at 145%, a number only matched in modern history by Nvidia, Micron, and SK Hynix. **

Karp essentially saying every stakeholder in every commercial buying meeting now shows up, which is a level of compression he has never seen in his career. The reason is simple and brutal: corporate America has finally agreed that AI is the way to transform the company, and the only software vendor that can credibly take a $100 million bet to redo your go-to-market or business intelligence stack is Palantir. Everyone else moves in $200K chunks. That’s not a bet, that’s a feature purchase.

Underneath the mega cap drama, the real signal of the week was the SaaS reacceleration. Atlassian +29%. Twilio +20%. Five9 +23%. Palantir on its own continent. The B2B apocalypse narrative isn’t over, but it’s no longer the only story. The framework for who survives is now binary: monetize your existing base with AI AND attract net new customers. One prong without the other is a slow ice cube. Atlassian got prong one. Twilio got both. HubSpot just announced agents will be on par with humans in their next release, which is the right vision and arrives a little late but not too late.

Anthropic raised $50B at $900B in 48 hours by sending out an email. There is no IPO on planet Earth that beats that. Sierra raised $950M at $15.8B on $150M in ARR, a 105x multiple, which Rory framed correctly as the next-generation software counter-narrative to “LLMs eat everything.” The Musk vs Altman trial entered week one with a distillation admission and a $30B Brockman stake disclosure that nobody put any personal capital behind.

And Brian Armstrong said the quiet part out loud at Coinbase: build or go.

Anyone who can’t ship and manage at the same time is out. Anyone on LinkedIn talking about “my team” is out. Lead from the front with AI or step aside. Every founder secretly wants this world. He just made it the policy.

Top Takeaways

1. The Mag 7 Super Bowl: $540B in Revenue, $700B in Capex, and the Top Pulling Away

Forget the individual results for a second and zoom out a million miles. Five of the seven largest companies on the planet are accelerating at scale, with 20% topline growth and 30-40% growth in some subsegments. And they’re letting capex grow 50-60% on top of that, such that capex is now eating most of their free cash flow.

This is leaning in like nothing we’ve ever seen. Normally it’s the upstarts being aggressive and the incumbents defending turf. Here, six of the seven largest market cap companies on the planet (counting Nvidia) just said hell no, we’re not going to get pushed around, we’re going to make the bet too. The top of the distribution is pulling away.

The somewhat dirty subtext: a big chunk of what these companies are boasting about is that they sold a lot of compute to two privately held LLM companies, and that they bought some of those tokens and resold them through their distribution. Both statements are true. Both made the revenue line go up. But zoomed out: the five largest market cap companies on Earth are effectively working as distribution and capex providers for two privately held companies that ultimately own the IP. That’s an interesting structural setup.

The risk anyone running these spreadsheets hits is the same: if the AI bet is wrong, all these valuations are wrong. Microsoft’s existing business excluding AI initiatives is flat to slightly down. The growth is coming entirely from these initiatives. Three years ago that wouldn’t have been true. Today it is.

2. Google Won the Quarter, but the Real Token Story Is Underwhelming

Of the five, Google ran away with it. Cloud backlog at $462 billion, growing 80% year on year, with everything clicking. Search didn’t die. Advertising didn’t die. SaaStr’s own SEO is up 60% year on year, the highest ever. The AI search disruption story that everyone wrote 18 months ago hasn’t happened economically.

But here’s the controversial take Rory raised. Google boasted that Gemini token production went from 10 billion per minute in Q4 to 16 billion per minute in Q1. That’s a 60% lift on the most aggressive quarter in American capitalism. Anthropic likely 10x’d in the same period. Tokens probably grew more than that.

Translation: the most aggressive quarter in American capitalism is an underperforming quarter relative to the privates. Google is the best of the public LLM providers, and they’re losing the coding battle, which is where every dollar is currently flowing. Coding is the tip of the spear, the canary in the coal mine, the motherload job for AI. Google is nowhere on coding compared to Anthropic and OpenAI.

The structural challenge for the hyperscalers: their growth is coming from selling compute to LLM companies and reselling LLM tokens through their distribution. The actual LLM IP layer accrues to two private companies. Even Google, which has its own model, is significantly underperforming the privates on the most attractive segment. That’s the bull case for Anthropic and the bear case underneath every hyperscaler print.

3. Microsoft’s $190B Bet: Strip Out AI and Revenue Is Flat

The single most sobering statistic from the entire earnings cycle. Strip out Azure AI growth and Copilot growth from Microsoft, and the rest of the business is flat to slightly down.

Microsoft’s AI ARR is $37B. Their 2026 capex is $190B. That math only works if the AI bet keeps compounding. If it doesn’t, Microsoft is another B2B company trading at three times revenues. Welcome to our world.

Three years ago this wouldn’t have been the case. Today, all the growth is coming from these initiatives, and the valuation is fully dependent on them continuing to scale. That’s not a comment on whether the bet is right or wrong. It’s a comment on the leverage. These companies have made the AI bet load-bearing for their entire valuation structure.

The thoughtful counter is this: when Wall Street gives you permission to spend, you spend. The cash on the balance sheet is trapped if you can’t deploy it. There are moments in time when the public market lets you spend without punishing the stock, and you should spend every dollar. Bezos had to fight Wall Street for 20 years to spend on AWS. Satya doesn’t have to fight anyone right now. He should grab it. The day will come when growth slows and the permission disappears, and at that point you’re literally at the mercy of getting another half cent of EPS.

The risk is exactly what Rory called out: when the permission is there but the ROI isn’t, you get groupthink and bad capital allocation. Right now th