AI Takes Center Stage in Big Tech Earnings Reports
Curated by THEOUTPOST
On Sun, 21 Jul, 8:00 AM UTC
5 Sources
5 Sources
[1]
All eyes on AI to drive Big Tech earnings
NEW YORK (AFP) - Over the next two weeks, the quarterly results of Big Tech giants will offer a glimpse on the bankability of artificial intelligence and whether the major investments AI requires are sustainable for the long haul. Analysts at Wedbush Securities, one of Wall Street's biggest believers in AI's potential, expect "growth and earnings to accelerate with the AI revolution and the wave of transformation" it is causing. The market generally agrees with this rosy AI narrative. Analysts forecast double-digit growth for heavyweights Microsoft and Google, in contrast to Apple, a latecomer to the AI party, with only three per cent growth expected. The iPhone maker, which releases its results on August 1, unveiled its new Apple Intelligence system only last month and plans to roll it out gradually over the next months, and only on the latest models. CFRA analyst Angelo Zino believes that the impact of these new features will not be felt until the iPhone 16 launches in September, the first to feature the new AI powers built-in across all options. But he expects Apple's upcoming earnings to show improvement in China sales, a black spot since last year. "Apple's forecasts for the current quarter will be important" in assessing the company's momentum, said Zino. But "if there's one that we were maybe a little bit more concerned about, versus the others, it would be Meta", he said. He pointed out that Mark Zuckerberg's company raised its investment projections last April as it devoted a few billion dollars more on the chips, servers and data centres needed to develop generative AI. CFRA expects Meta's growth to decelerate through the end of the year. Combined with the expected increase in spending on AI, that should put earnings under pressure. As for the earnings of cloud giants Microsoft (July 30) and Amazon (August 1), "we expect them to continue to report very good results, in line with or better than market expectations," said Zino. Microsoft is among the best positioned to monetise generative AI, having moved the fastest to implement it across all its products, and pouring USD13 billion into OpenAI, the startup stalwart behind ChatGPT. Winning the big bet on AI is "crucial" for the group, said Jeremy Goldman of Emarketer, "but the market is willing to give them a level of patience". The AI frenzy has helped Microsoft's cloud computing business grow in the double digits, something that analysts said could be hard to sustain. "This type of growth cannot hold forever, but the synergies between cloud and AI make it more likely that Microsoft holds onto reliable cloud growth for some time to come," Goldman said. As for Amazon, "investors will want to see that the reacceleration of growth over the first quarter wasn't a one-off" at AWS, the company's world-leading cloud business, said Matt Britzman of Hargreaves Lansdown. Since AWS leads "in everything data-related, it should be well placed to capture a huge chunk of the demand coming from the AI wave," he added. The picture "might be a little less clear" for Google parent Alphabet, which will be the first to publish results on Tuesday, "because of their search business" online, warned Zino. "Skepticism around AI Overviews," introduced by Google in mid-May, "is certainly justified", said Emarketer analyst Evelyn Mitchell-Wolf. This new feature, which offers a written text at the top of results in a Google search, ahead of the traditional links to sites, got off to a rocky start. Internet users were quick to report strange, or potentially dangerous, answers proposed by the feature that had been touted by Google executives as the future direction of search. According to data from BrightEdge, relayed by Search Engine Land, the number of searches presenting a result generated by AI Overviews has plummeted in recent weeks as Google shies away from the feature. Still, many are concerned about the evolution of advertising across the internet if Google pushes on with the Overviews model, which reduces the necessity of clicking into links. Content creators, primarily the media, fear a collapse in revenues. But for Emarketer's Mitchell-Wolf, "as long as Google maintains its status as the default search engine across most smartphones and major browsers, it will continue to be the top destination for search, and the top destination for search ad spending."
[2]
All Eyes On AI To Drive Big Tech Earnings
Over the next two weeks, the quarterly results of Big Tech giants will offer a glimpse on the bankability of artificial intelligence and whether the major investments AI requires are sustainable for the long haul. Analysts at Wedbush Securities, one of Wall Street's biggest believers in AI's potential, expect "growth and earnings to accelerate with the AI revolution and the wave of transformation" it is causing. The market generally agrees with this rosy AI narrative. Analysts forecast double-digit growth for heavyweights Microsoft and Google, in contrast to Apple, a latecomer to the AI party, with only three percent growth expected. The iPhone maker, which releases its results on August 1, unveiled its new Apple Intelligence system only last month and plans to roll it out gradually over the next months, and only on the latest models. CFRA analyst Angelo Zino believes that the impact of these new features will not be felt until the iPhone 16 launches in September, the first to feature the new AI powers built-in across all options. But he expects Apple's upcoming earnings to show improvement in China sales, a black spot since last year. "Apple's forecasts for the current quarter will be important" in assessing the company's momentum, said Zino. But "if there's one that we were maybe a little bit more concerned about, versus the others, it would be Meta," he said. He pointed out that Mark Zuckerberg's company raised its investment projections last April as it devoted a few billion dollars more on the chips, servers and data centers needed to develop generative AI. CFRA expects Meta's growth to decelerate through the end of the year. Combined with the expected increase in spending on AI, that should put earnings under pressure. As for the earnings of cloud giants Microsoft (July 30) and Amazon (August 1), "we expect them to continue to report very good results, in line with or better than market expectations," said Zino. Microsoft is among the best positioned to monetize generative AI, having moved the fastest to implement it across all its products, and pouring $13 billion into OpenAI, the startup stalwart behind ChatGPT. Winning the big bet on AI is "crucial" for the group, said Jeremy Goldman of Emarketer, "but the market is willing to give them a level of patience." The AI frenzy has helped Microsoft's cloud computing business grow in the double digits, something that analysts said could be hard to sustain. "This type of growth cannot hold forever, but the synergies between cloud and AI make it more likely that Microsoft holds onto reliable cloud growth for some time to come," Goldman said. As for Amazon, "investors will want to see that the reacceleration of growth over the first quarter wasn't a one-off" at AWS, the company's world-leading cloud business, said Matt Britzman of Hargreaves Lansdown. Since AWS leads "in everything data-related, it should be well placed to capture a huge chunk of the demand coming from the AI wave," he added. The picture "might be a little less clear" for Google parent Alphabet, which will be the first to publish results on Tuesday, "because of their search business" online, warned Zino. "Skepticism around AI Overviews," introduced by Google in mid-May, "is certainly justified," said Emarketer analyst Evelyn Mitchell-Wolf. This new feature, which offers a written text at the top of results in a Google search, ahead of the traditional links to sites, got off to a rocky start. Internet users were quick to report strange, or potentially dangerous, answers proposed by the feature that had been touted by Google executives as the future direction of search. According to data from BrightEdge, relayed by Search Engine Land, the number of searches presenting a result generated by AI Overviews has plummeted in recent weeks as Google shies away from the feature. Still, many are concerned about the evolution of advertising across the internet if Google pushes on with the Overviews model, which reduces the necessity of clicking into links. Content creators, primarily the media, fear a collapse in revenues. But for Emarketer's Mitchell-Wolf, "as long as Google maintains its status as the default search engine across most smartphones and major browsers, it will continue to be the top destination for search, and the top destination for search ad spending."
[3]
All eyes on AI to drive Big Tech earnings
Over the next two weeks, the quarterly results of Big Tech giants will offer a glimpse on the bankability of artificial intelligence and whether the major investments AI requires are sustainable for the long haul. Analysts at Wedbush Securities, one of Wall Street's biggest believers in AI's potential, expect "growth and earnings to accelerate with the AI revolution and the wave of transformation" it is causing. The market generally agrees with this rosy AI narrative. Analysts forecast double-digit growth for heavyweights Microsoft and Google, in contrast to Apple, a latecomer to the AI party, with only three percent growth expected. The iPhone maker, which releases its results on August 1, unveiled its new Apple Intelligence system only last month and plans to roll it out gradually over the next months, and only on the latest models. CFRA analyst Angelo Zino believes that the impact of these new features will not be felt until the iPhone 16 launches in September, the first to feature the new AI powers built-in across all options. But he expects Apple's upcoming earnings to show improvement in China sales, a black spot since last year. "Apple's forecasts for the current quarter will be important" in assessing the company's momentum, said Zino. But "if there's one that we were maybe a little bit more concerned about, versus the others, it would be Meta," he said. He pointed out that Mark Zuckerberg's company raised its investment projections last April as it devoted a few billion dollars more on the chips, servers and data centers needed to develop generative AI. CFRA expects Meta's growth to decelerate through the end of the year. Combined with the expected increase in spending on AI, that should put earnings under pressure. As for the earnings of cloud giants Microsoft and Amazon , "we expect them to continue to report very good results, in line with or better than market expectations," said Zino. Microsoft is among the best positioned to monetize generative AI, having moved the fastest to implement it across all its products, and pouring $13 billion into OpenAI, the startup stalwart behind ChatGPT. Winning the big bet on AI is "crucial" for the group, said Jeremy Goldman of Emarketer, "but the market is willing to give them a level of patience." The AI frenzy has helped Microsoft's cloud computing business grow in the double digits, something that analysts said could be hard to sustain. "This type of growth cannot hold forever, but the synergies between cloud and AI make it more likely that Microsoft holds onto reliable cloud growth for some time to come," Goldman said. As for Amazon, "investors will want to see that the reacceleration of growth over the first quarter wasn't a one-off" at AWS, the company's world-leading cloud business, said Matt Britzman of Hargreaves Lansdown. Since AWS leads "in everything data-related, it should be well placed to capture a huge chunk of the demand coming from the AI wave," he added. The picture "might be a little less clear" for Google parent Alphabet, which will be the first to publish results on Tuesday, "because of their search business" online, warned Zino. "Skepticism around AI Overviews," introduced by Google in mid-May, "is certainly justified," said Emarketer analyst Evelyn Mitchell-Wolf. This new feature, which offers a written text at the top of results in a Google search, ahead of the traditional links to sites, got off to a rocky start. Internet users were quick to report strange, or potentially dangerous, answers proposed by the feature that had been touted by Google executives as the future direction of search. According to data from BrightEdge, relayed by Search Engine Land, the number of searches presenting a result generated by AI Overviews has plummeted in recent weeks as Google shies away from the feature. Still, many are concerned about the evolution of advertising across the internet if Google pushes on with the Overviews model, which reduces the necessity of clicking into links. Content creators, primarily the media, fear a collapse in revenues. But for Emarketer's Mitchell-Wolf, "as long as Google maintains its status as the default search engine across most smartphones and major browsers, it will continue to be the top destination for search, and the top destination for search ad spending." tu/arp/bbk
[4]
All eyes on AI to drive Big Tech earnings
Over the next two weeks, the quarterly results of Big Tech giants will offer a glimpse on the bankability of artificial intelligence and whether the major investments AI requires are sustainable for the long haul. According to data from BrightEdge, relayed by Search Engine Land, the number of searches presenting a result generated by AI Overviews has plummeted in recent weeks as Google shies away from the feature.Over the next two weeks, the quarterly results of Big Tech giants will offer a glimpse on the bankability of artificial intelligence and whether the major investments AI requires are sustainable for the long haul. Analysts at Wedbush Securities, one of Wall Street's biggest believers in AI's potential, expect "growth and earnings to accelerate with the AI revolution and the wave of transformation" it is causing. The market generally agrees with this rosy AI narrative. Analysts forecast double-digit growth for heavyweights Microsoft and Google, in contrast to Apple, a latecomer to the AI party, with only three percent growth expected. The iPhone maker, which releases its results on August 1, unveiled its new Apple Intelligence system only last month and plans to roll it out gradually over the next months, and only on the latest models. CFRA analyst Angelo Zino believes that the impact of these new features will not be felt until the iPhone 16 launches in September, the first to feature the new AI powers built-in across all options. But he expects Apple's upcoming earnings to show improvement in China sales, a black spot since last year. "Apple's forecasts for the current quarter will be important" in assessing the company's momentum, said Zino. But "if there's one that we were maybe a little bit more concerned about, versus the others, it would be Meta," he said. He pointed out that Mark Zuckerberg's company raised its investment projections last April as it devoted a few billion dollars more on the chips, servers and data centers needed to develop generative AI. CFRA expects Meta's growth to decelerate through the end of the year. Combined with the expected increase in spending on AI, that should put earnings under pressure. As for the earnings of cloud giants Microsoft (July 30) and Amazon (August 1), "we expect them to continue to report very good results, in line with or better than market expectations," said Zino. 'Crucial' bet Microsoft is among the best positioned to monetize generative AI, having moved the fastest to implement it across all its products, and pouring $13 billion into OpenAI, the startup stalwart behind ChatGPT. Winning the big bet on AI is "crucial" for the group, said Jeremy Goldman of Emarketer, "but the market is willing to give them a level of patience." The AI frenzy has helped Microsoft's cloud computing business grow in the double digits, something that analysts said could be hard to sustain. "This type of growth cannot hold forever, but the synergies between cloud and AI make it more likely that Microsoft holds onto reliable cloud growth for some time to come," Goldman said. As for Amazon, "investors will want to see that the reacceleration of growth over the first quarter wasn't a one-off" at AWS, the company's world-leading cloud business, said Matt Britzman of Hargreaves Lansdown. Since AWS leads "in everything data-related, it should be well placed to capture a huge chunk of the demand coming from the AI wave," he added. The picture "might be a little less clear" for Google parent Alphabet, which will be the first to publish results on Tuesday, "because of their search business" online, warned Zino. "Skepticism around AI Overviews," introduced by Google in mid-May, "is certainly justified," said Emarketer analyst Evelyn Mitchell-Wolf. This new feature, which offers a written text at the top of results in a Google search, ahead of the traditional links to sites, got off to a rocky start. Internet users were quick to report strange, or potentially dangerous, answers proposed by the feature that had been touted by Google executives as the future direction of search. According to data from BrightEdge, relayed by Search Engine Land, the number of searches presenting a result generated by AI Overviews has plummeted in recent weeks as Google shies away from the feature. Still, many are concerned about the evolution of advertising across the internet if Google pushes on with the Overviews model, which reduces the necessity of clicking into links. Content creators, primarily the media, fear a collapse in revenues. But for Emarketer's Mitchell-Wolf, "as long as Google maintains its status as the default search engine across most smartphones and major browsers, it will continue to be the top destination for search, and the top destination for search ad spending."
[5]
All eyes on AI to drive Big Tech earnings
New York (AFP) - Over the next two weeks, the quarterly results of Big Tech giants will offer a glimpse on the bankability of artificial intelligence and whether the major investments AI requires are sustainable for the long haul. Analysts at Wedbush Securities, one of Wall Street's biggest believers in AI's potential, expect "growth and earnings to accelerate with the AI revolution and the wave of transformation" it is causing. The market generally agrees with this rosy AI narrative. Analysts forecast double-digit growth for heavyweights Microsoft and Google, in contrast to Apple, a latecomer to the AI party, with only three percent growth expected. The iPhone maker, which releases its results on August 1, unveiled its new Apple Intelligence system only last month and plans to roll it out gradually over the next months, and only on the latest models. CFRA analyst Angelo Zino believes that the impact of these new features will not be felt until the iPhone 16 launches in September, the first to feature the new AI powers built-in across all options. But he expects Apple's upcoming earnings to show improvement in China sales, a black spot since last year. "Apple's forecasts for the current quarter will be important" in assessing the company's momentum, said Zino. But "if there's one that we were maybe a little bit more concerned about, versus the others, it would be Meta," he said. He pointed out that Mark Zuckerberg's company raised its investment projections last April as it devoted a few billion dollars more on the chips, servers and data centers needed to develop generative AI. CFRA expects Meta's growth to decelerate through the end of the year. Combined with the expected increase in spending on AI, that should put earnings under pressure. As for the earnings of cloud giants Microsoft (July 30) and Amazon (August 1), "we expect them to continue to report very good results, in line with or better than market expectations," said Zino. 'Crucial' bet Microsoft is among the best positioned to monetize generative AI, having moved the fastest to implement it across all its products, and pouring $13 billion into OpenAI, the startup stalwart behind ChatGPT. Winning the big bet on AI is "crucial" for the group, said Jeremy Goldman of Emarketer, "but the market is willing to give them a level of patience." The AI frenzy has helped Microsoft's cloud computing business grow in the double digits, something that analysts said could be hard to sustain. "This type of growth cannot hold forever, but the synergies between cloud and AI make it more likely that Microsoft holds onto reliable cloud growth for some time to come," Goldman said. As for Amazon, "investors will want to see that the reacceleration of growth over the first quarter wasn't a one-off" at AWS, the company's world-leading cloud business, said Matt Britzman of Hargreaves Lansdown. Since AWS leads "in everything data-related, it should be well placed to capture a huge chunk of the demand coming from the AI wave," he added. The picture "might be a little less clear" for Google parent Alphabet, which will be the first to publish results on Tuesday, "because of their search business" online, warned Zino. "Skepticism around AI Overviews," introduced by Google in mid-May, "is certainly justified," said Emarketer analyst Evelyn Mitchell-Wolf. This new feature, which offers a written text at the top of results in a Google search, ahead of the traditional links to sites, got off to a rocky start. Internet users were quick to report strange, or potentially dangerous, answers proposed by the feature that had been touted by Google executives as the future direction of search. According to data from BrightEdge, relayed by Search Engine Land, the number of searches presenting a result generated by AI Overviews has plummeted in recent weeks as Google shies away from the feature. Still, many are concerned about the evolution of advertising across the internet if Google pushes on with the Overviews model, which reduces the necessity of clicking into links. Content creators, primarily the media, fear a collapse in revenues. But for Emarketer's Mitchell-Wolf, "as long as Google maintains its status as the default search engine across most smartphones and major browsers, it will continue to be the top destination for search, and the top destination for search ad spending."
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As major tech companies prepare to release their quarterly earnings, artificial intelligence (AI) is expected to be a key focus. Investors and analysts are keen to see how AI investments and innovations are impacting the financial performance of industry giants like Microsoft, Alphabet, and Meta.
AI Dominates Big Tech Earnings Expectations
As the earnings season approaches, all eyes are on artificial intelligence (AI) and its potential to drive growth for major technology companies. Industry giants such as Microsoft, Alphabet, and Meta are set to report their quarterly results, with investors and analysts eagerly anticipating insights into how AI investments are impacting their bottom lines 1.
Microsoft's AI Integration
Microsoft, scheduled to report its earnings on Tuesday, is expected to showcase the benefits of its significant AI investments. The company's partnership with OpenAI and the integration of ChatGPT technology into its products have positioned it as a frontrunner in the AI race. Analysts predict that Microsoft's cloud computing division, Azure, will see accelerated growth due to AI-related demand 2.
Alphabet's AI Advancements
Alphabet, Google's parent company, is also set to report its earnings on Tuesday. The tech giant has been making strides in AI development, with its chatbot Bard and other AI-powered tools. Investors will be looking for signs of how these innovations are translating into revenue growth, particularly in the company's cloud services and advertising businesses 3.
Meta's AI Strategy
Meta Platforms, formerly Facebook, is expected to report its earnings on Wednesday. The company has been investing heavily in AI and the metaverse, and shareholders will be keen to see how these investments are paying off. Meta's AI-driven content recommendation algorithms and advertising targeting capabilities are likely to be focal points in the earnings report 4.
Market Expectations and Challenges
The tech-heavy Nasdaq index has seen significant gains this year, largely driven by enthusiasm surrounding AI. However, some analysts caution that the high expectations for AI-driven growth may be difficult to meet in the short term. Companies will need to demonstrate tangible benefits from their AI investments to justify the market optimism 5.
Broader Economic Factors
While AI is a major focus, other economic factors will also play a role in the earnings reports. The global economic slowdown, inflation concerns, and potential regulatory challenges could impact the financial performance of these tech giants. Investors will be looking for guidance on how companies plan to navigate these challenges while continuing to innovate in AI 1.
Long-term AI Investments
Despite the immediate focus on quarterly results, it's important to note that AI investments are generally long-term strategies. Companies are likely to emphasize their ongoing commitment to AI development and its potential to drive future growth. This may include discussions of research initiatives, talent acquisition, and plans for further AI integration across product lines 3.
Reference
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