Five of the Big Tech companies are reporting their earnings this week in what is a critical season.
With a combined market value of over $10 trillion, the focus is on Big Tech, including Microsoft, Alphabet, Meta Platforms, Amazon and Apple. Mega cap Tech companies fuelled most of the S&P’s 2023 gain with 24%.
Investors are looking for indications of the firms that will benefit the most from artificial intelligence (AI) technologies.
Microsoft showed above-expected returns of $62 billion due to increased AI and cloud revenue. Microsoft CEO Satya Nadella stated, “We’ve moved from talking about AI to applying AI at scale. By infusing AI across every layer of our tech stack, we’re winning new customers and helping drive new benefits and productivity gains across every sector.”
Microsoft has been one of the biggest beneficiaries of AI trade, with shares rocketing over 50% in the last year, pushing Microsoft’s market cap to over $3 trillion and making it the wealthiest company in the world, pushing out Apple in the number one slot.
Google saw a 5% share fall as revenue missed expectations. Despite revenue exceeding last year at $72 billion, investors focused on the advertising drop instead of its AI cloud increase.
AMD, one of the AI industry’s major chip makers, met expectations, but shares still fell about 2%.
Investors seem to forget the meteoric rise of AI companies and their massive gains, which are extraordinary on their own. They seem to be riding the high, and when these companies perform above expectations despite a few setbacks in some divisions, investors seem to feel betrayed by expected results.
Despite shares falling slightly due to Investor sentiment, AI is here to stay, and there are opportunities to take advantage of lower-priced stock. Purchasing these mega stocks at lower prices allows for higher profits when stock prices rebound.