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Tech Giants Struggle to Justify AI Investments to Wall Street
2024-08-03 05:50:09
Artificial Intelligence
Tech
Business

Tech Giants Struggle to Justify AI Investments to Wall Street

Big Tech leaders like Amazon, Microsoft, and Alphabet face skepticism from investors over the returns on their AI investments, resulting in share price drops after earnings announcements. Despite optimistic outlooks from Meta Platforms and Apple on AI-driven growth, doubts persist.

Amazon's commitment to AI in its AWS cloud unit is met with caution. Analysts warn of a potential downturn in the AI market without substantial advancements.

Chipmakers like Nvidia and SK Hynix, central to the AI boom, also see shares decline, with Intel losing ground to AI frontrunners. Tech's push for AI, highlighted by a 161% increase in capital spending over four years, leaves Wall Street wary of the future payoff.

Related news on that topic:

Analysts Revise Price Targets for Intel, AMD, Seagate, Apple, and ... Arm Stocks

Intel shares have plummeted 40% YTD, prompting analysts to revise price targets and express skepticism about restoring confidence and margins. CEO Gelsinger is leading a turnaround, investing in chip-foundry and cutting jobs, while launching new chips to compete with AMD. Seagate, on the other hand, reported strong earnings and received positive price target revisions due to its technology leadership. Apple is developing a foldable iPhone and plans to integrate AI-powered tasks into its ecosystem. Analysts have adjusted Apple's stock price targets ahead of earnings. Arm Holdings reported solid earnings, but its stock price fell as guidance fell short of expectations. Overall, analysts are closely monitoring these stocks and adjusting their price targets based on company performance and market dynamics.

Amazon Stock Declines on Disappointing Sales Outlook

Amazon's stock dropped 5% as Q3 sales guidance missed estimates, despite exceeding EPS expectations. AWS showed strong growth, while advertising revenue fell short. Amid Big Tech earnings reports, including Microsoft, Alphabet, Meta, and Apple, investors are wary of significant AI spending. The company faces increased competition from ecommerce giants like Temu and Shein. The Q3 revenue and profit forecasts below expectations led to an 8% decline in stock price. Amazon is ramping up capital expenditures to boost AI and cloud services, aiming to stay ahead in the market. Major news events like the Olympics and political disruptions have impacted consumer spending habits, posing challenges in sales forecasting, according to Amazon's CFO. This uncertain landscape may also influence marketing strategies of other companies amidst ongoing economic pressures.

Read 39 more recent news on this topic

The press radar on this topic:

Yahoo Finance
2. August 2024 um 13:49

Big Tech Fails to Convince Wall Street That AI Is Paying Off

Technology
Economy
Finance
Big Tech giants like Amazon, Microsoft, and Alphabet failed to convince Wall Street that their AI investments are paying off, with their shares falling after reporting earnings. Meta Platforms CEO Mark Zuckerberg has framed the company's sky-high spending on AI as a short-term sacrifice for long-term gain, and Apple similarly said new AI features will spur iPhone upgrades in the coming months, helping the company reemerge from a sales slowdown that has hit its China business. Amazon Chief Fina..
New York Times - Technology
2. August 2024 um 20:24

Tech Bosses Preach Patience as They Spend and Spend on A.I.

Technology
Economy
Finance
Tech giants have increased AI-related capital expenses by 161% over 4 years, spending over $59 billion in the last quarter alone on building data centers and computer systems to develop AI capabilities, despite investor concerns about long-term payoff.
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