about $1.5 trillion in market value
Wall Street's perception of AI's impact on tech giants is increasingly polarized as the world's largest companies unveil their earnings and capex forecasts. Nearly $2 trillion in market value has shifted this week, focusing on six megacaps reporting earnings. Amazon, Microsoft, and Alphabet, three major hyperscalers, have seen their market caps soar after strong cloud growth, with Amazon adding over $400 billion and Alphabet adding more than $400 billion.
In contrast, Meta's stock has plummeted by about $85 billion due to skepticism surrounding its AI investment strategy. Apple experienced an even steeper decline, losing over $350 billion in market value, primarily due to a memory shortage affecting its outlook. Tesla also faced a loss of around $7 billion after going cash flow negative and forecasting higher spending.
According to Jason Greenberg, co-head of global tech, media, and telecom investment banking at Jefferies, AI spending among the megacaps is expected to reach nearly $800 billion over the next 12 months. Investors are now focused on whether long-term demand for AI-generated returns will be profitable enough to justify the investments.
Despite Apple reporting above-market expectations for earnings, revenue, and iPhone sales, the company issued weak guidance for the current quarter due to supply constraints. This led to a 7% drop in Apple shares on Friday. Amazon's cloud computing business revenue jumped 37% year-on-year, while AWS is closely monitored as an indicator of demand for AI products.
Amazon's forecast for capital expenditures to reach $220 billion this year, up from $200 billion, further supports the belief that its AI-related infrastructure investments are meeting market demand. However, Apple's stock has risen by 23% over the same period, positioning it as an alternative to other heavy spenders in the AI sector.
Investors' divergent reactions to Meta's earnings and Amazon and Apple's strategies demonstrate the growing uncertainty surrounding AI investment.
Written by urgent.news from CNBC's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
