Big Tech’s Earnings Are Exposing the True Cost of AI VIEW IN BROWSER Dominance used to be profitable; now it’s expensive. There was a time when the biggest tech companies could sit back and let the money roll in. Once you were on top, staying there mostly meant not screwing it up. But tech doesn’t work that way forever. Every so often, something new comes along that forces even the big names to start spending like crazy just to keep their edge. Microsoft Corporation (MSFT) had to do it when the internet took over, and Amazon.com, Inc. (AMZN) did it when cloud computing came along. Artificial intelligence is creating that same kind of pressure again – only this time, the price tag is much bigger. It’s pushing even the most powerful companies in the world to pour billions into staying relevant. And this week, four of the Magnificent Seven stocks reported earnings, letting us see just how expensive that dominance became. So, in today’s Market 360, I’ll review four of the seven Magnificent Seven earnings that reported: Microsoft, Meta Platforms, Inc. (META), Tesla, Inc. (TSLA) and Apple Inc. (AAPL). Then, I’ll explain how this surge in spending connects to a much larger initiative taking shape beyond Big Tech, and how you can profit from it. Microsoft Let’s start with Microsoft. The company reported second-quarter earnings for 2026 on Wednesday. Revenue was $81.3 billion and increased 17% year-over-year. Earnings of $5.16 per share beat expectations. Microsoft’s Cloud services, the backbone of its AI platforms, accounted for more than $50 billion in revenue, with Azure and related services rising about 39% year over year. While this slightly beat expectations, it was slower than the 40% growth that was reported in the previous quarter – and that slowdown caught investors’ attention. A large portion of the company’s future cloud revenue backlog is tied to AI workloads. At the same time, Microsoft spent $37.5 billion on capital expenditures during the quarter, a 66% increase from a year ago. Roughly two-thirds of that spending went toward graphics processing units (GPUs) and other AI-related infrastructure. CEO Satya Nadella said on the company’s earnings call that Microsoft’s AI efforts are “only at the beginning phases.” Put those pieces together, and Wall Street got uneasy, sending shares roughly 12% lower on Thursday. Bottom line: Microsoft didn’t disappoint on results. It reminded investors how expensive AI dominance has become. Meta Platforms Next up is Meta. For the fourth quarter, Meta reported earnings of $8.88 per share on $59.9 billion in revenue, topping estimates for $8.16 per share on $58.4 billion. But once again, the real story was spending. Meta said it expects total AI-related investment to reach between $115 billion and $135 billion by 2026, as it races to build out data centers, compute capacity and next-generation AI models. The company is also spending aggressively on talent and capabilities, including a $14.3 billion investment for a 49% stake in Scale AI, alongside the hiring of its CEO, Alexandr Wang, to lead Meta’s AI efforts. Meta’s willingness to spend highlights a different side of dominance. When your core business throws off enough cash, you can afford to make massive bets to stay ahead. Investors rewarded that confidence, and Meta shares rose about 8% on Thursday. Tesla Tesla rounded out Wednesday’s reports. For the fourth quarter, the company posted adjusted earnings of $0.50 per share on $24.9 billion in revenue, slightly ahead of expectations for $0.45 per share on $25.1 billion. While Tesla’s auto business remains under pressure, management made it clear where future investment is headed. The company plans to invest $2 billion in xAI, Elon Musk’s artificial intelligence startup, and up to $20 billion to accelerate its push into AI and robotics – roughly double last year’s number. The company also said production of its Optimus robots is on track for the end of 2026. For Tesla, this spending reflects a different kind of dominance challenge. Tesla’s future as a “car company” may be in question by some market watchers. Indeed, it appears the company itself considers AI and physical intelligence a central to the company’s evolution. That probably explains the cautious reaction from investors, as the stock slipped by about 2% on Thursday. Apple And finally, we got a slice of Apple’s earnings Thursday afternoon. For its fourth quarter, the company reported $2.84 earnings per share on $143.8 billion in revenue, beating expectations for $2.68 earnings per share on $138.4 billion. iPhone revenue hit an all-time record of $85.3 billion, blowing past the $78.3 billion analysts were expecting. Apple also saw a real rebound in China, with sales rising to $25.5 billion – a 38% jump from a year ago – after declining in three of the previous four quarters. The bigger question, though, is what Apple plans to do with AI. Apple has taken the “slow and steady” approach. The company recently bought an AI startup called Q.AI for about $2 billion, and it announced a multi-year partnership with Alphabet Inc. (GOOGL) to use Google’s Gemini AI technology to improve Siri. The Siri upgrade has been talked about for years and delayed along the way, but Apple says it’s finally on track to roll out later this year. On top of that, CEO Tim Cook said on the earnings call that Apple is dealing with a global shortage of memory chips, following increased demand for its iPhones. This added another layer of uncertainty for investors, leaving them unimpressed with Apple’s slow and steady approach. Apple shares dipped slightly yesterday. This Is Bigger Than Big Tech What’s becoming clear is that Wall Street is growing increasingly anxious about the jaw-dropping amount of money Big Tech is spending on AI. They’re getting antsy – they want to start seeing results. Now, some of the Big Tech companies are starting to show it. Others, well, the jury’s still out. But let’s step back for a moment and consider something According to The New York Times, Big Tech is expected to invest more than $400 billion in AI infrastructure over 2025 and 2026. Some projections put that number as high as $530 billion by 2026 alone. That means capital is pouring into data centers, GPUs, networking equipment and power infrastructure at an unprecedented pace. And this is the key point. This AI spending wave doesn’t stop with Big Tech. When spending reaches this scale, history shows that the story rarely ends with the household names writing the checks. In moments like this, the opportunity often shifts to the companies enabling the AI buildout – the ones supplying the infrastructure, materials, systems and technology that make all of it possible. As my InvestorPlace colleague Luke Lango recently put it: The early read-through is crystal clear: AI infrastructure spending and enterprise adoption are both accelerating. That’s why AI compute, memory, networking, cloud, data, and design stocks continue to lead, while most other sectors lag. We expect that leadership to persist throughout 2026. I couldn’t agree more. The AI Revolution is just getting started, folks. And it’s imperative that we win the race. In fact, the U.S. government has made winning the AI race a national priority and is beginning to align policy, funding and industry around that goal. To help make sense of what’s happening, Luke recently put together a special briefing called Genesis Mission. In it, Luke explains how this massive AI buildout is taking shape, why government coordination is accelerating the process and which areas of the market he believes are positioned to benefit as capital and execution ramp up in 2026 and beyond. If you want to see where this AI arms race is heading – and how investors can position ahead of the next wave – I encourage you to watch it. Click here to watch Luke’s special briefing now. Sincerely, | .png)
.png)
Tidak ada komentar:
Posting Komentar