Tech Giants Report Earnings Amid AI Spending Scrutiny
Amazon, Microsoft, and Alphabet report third-quarter earnings as investors question the economic viability and infrastructure costs of the artificial intelligence boom.
The third-quarter earnings season has reached its first peak week, with 1,885 global companies scheduled to release financial results. While S&P 500 earnings per share growth remains strong at 29.5%, investors have shifted their focus toward the massive costs of artificial intelligence infrastructure.
Microsoft, Alphabet Inc., and Amazon.com are reporting results on Wednesday. This sequence serves as a critical test for the AI boom following a selloff of Meta Platforms Incorporated shares, which dropped nearly 7% after increased spending plans overshadowed revenue growth. Market turmoil and rising bond yields have further fueled warnings of an AI bubble.
Microsoft is introducing a revamped reporting structure that combines cloud, AI, and business software into a new Agents and Infra division, and will disclose absolute quarterly revenue for Azure for the first time. Alphabet Inc. faces concerns that AI chatbots are slowing growth in its core search business, even as Google Cloud revenue is projected to surge 95.1% to $29.57 billion. Amazon.com enters the reports with expectations of 38.2% revenue growth for its cloud business.
Apple Inc. is scheduled to report its earnings the following Monday. Other S&P 500 companies, including General Dynamics and Baker Hughes, have also confirmed earnings dates that deviate from their historical norms.
