Over the next two weeks, Big Tech giants will reveal their quarterly results, providing insight into the profitability of artificial intelligence and the sustainability of its hefty investments. Analysts at Wedbush Securities, strong proponents of AI’s potential, predict accelerated growth and earnings driven by the AI revolution.
The market generally supports this optimistic view. Analysts expect double-digit growth for Microsoft and Google, while Apple, which is late to the AI scene, is projected to see only a 3% growth. Apple, releasing its results on August 1, introduced its new Apple Intelligence system last month and plans to gradually roll it out on its latest models. CFRA analyst Angelo Zino suggests the impact of these features won’t be felt until the iPhone 16 launches in September, though he anticipates improved China sales for Apple.
Meta, however, raises some concerns. Despite increasing its AI investment projections, CFRA expects Meta’s growth to slow down, putting pressure on its earnings. In contrast, Microsoft and Amazon are expected to report strong results, with Microsoft’s swift AI integration and $13 billion investment in OpenAI positioning it well. The AI surge has significantly boosted Microsoft’s cloud computing business, though sustaining this growth long-term may be challenging.
Amazon’s cloud business, AWS, is also well-placed to benefit from the AI wave, with investors keen to see continued growth. Google’s outlook is more uncertain due to its AI Overviews feature in search results, which has faced criticism and a decline in usage. Despite concerns, Google’s dominant position in search and search ad spending is expected to continue.
