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Big Tech Coys Eye AI to Drive Earnings

POSTED ON July 22, 2024 •   TECHNOLOGY      BY Abiodun Saheed Omodara
OpenAI vs Microsoft l Credit: shutterstock

In the upcoming two weeks, the quarterly performance of major big tech companies will provide insight into the feasibility of artificial intelligence and whether the substantial investments required for AI are sustainable in the long run. 

Wedbush Securities analysts, strong supporters of AI's potential, anticipate accelerated growth and earnings due to the AI revolution and its transformative impact. 

Market consensus aligns with this positive outlook on AI, with projections of double-digit growth for tech giants Microsoft and Google, while Apple, a late entrant to the AI arena, is expected to see only three per cent growth. 

Apple recently introduced its Apple Intelligence system and planned to gradually roll it out, initially available only on the latest models. 

Analyst Angelo Zino from CFRA suggests that the full impact of these new features may not be felt until the launch of the iPhone 16 in September, which will be the first to incorporate the new AI capabilities across all options. 

Nevertheless, he anticipates an improvement in Apple's China sales in the upcoming earnings report, addressing a previous weak point. The company's forecasts for the current quarter will be crucial in evaluating its momentum. 

However, Zino expresses some concern about Meta, noting that the company increased its investment projections in April, particularly in generative AI development. 

CFRA expects Meta's growth to slow down by the end of the year, with increased AI spending putting pressure on earnings. 

On the other hand, Zino anticipates strong results from cloud giants Microsoft (reporting on July 30) and Amazon (reporting on August 1), expecting them to meet or exceed market expectations. 

Microsoft is positioned as one of the top contenders in this "critical" AI landscape.
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