See you next week for Microsoft, Google, and Meta earnings reports! The key verification of "AI belief" is coming

Image credit: Generated by Unbounded AI tools

Source: Wall Street News

Author: Zhou Xiaowen

The US stock earnings season is about to enter a period of intensive disclosure, and the reports of artificial intelligence-related giants are undoubtedly the focus of the market.

Next week, Microsoft, Google and Meta will announce their performance reports. As giants related to fields such as artificial intelligence, cloud computing and digital advertising, their reports will affect market expectations, and will also have an impact on other technology companies that will report later - Amazon, Nvidia, etc.

Especially Microsoft, as the current leader in the field of artificial intelligence, it just announced the pricing of Office 365 Copilot last week.

**If the market doesn’t see meaningful revenue from these giants for quite some time, then the so-called “AI stocks” may cool off in general, especially the more speculative ones. **

For AI-related equipment suppliers such as Nvidia, Broadcom and Arista Networks, guidance from the latest tech giants, especially on spending, will be key. **

The cloud-computing-related content of the three giants’ reports is critical to Amazon, which relies on Amazon Web Services for the majority of its profits. In addition to ServiceNow’s bottom line, they could impact leading software companies like Datadog, Dynatrace, Cloudflare, and MongoDB.

At present, the market generally expects that after four consecutive quarters of decline, Google will achieve a 9% profit growth this quarter, of which core search business sales may increase by 4%. The merger of the DeepMind and Brain divisions could also help speed up the introduction of new products related to large language models.

Microsoft’s adjusted operating margin is expected to rise to 42% from 40% a year ago, protecting margins by raising pricing as the advent of artificial intelligence drives up the cost of processing workloads. Jefferies noted that Microsoft’s recently announced pricing for its AI assistant for business customers was more than double what it initially expected.

After shrinking for six consecutive quarters, the market expects Meta to return to growth in the second quarter, with earnings per share expected to increase by 19%.

Analysts believe that Meta’s new “Twitter killer” app Threads outpaced ChatGPT in popularity earlier this month, thanks to Meta’s already existing Instagram user base. The new app will generate billions of dollars in revenue for Meta over the next few years.