① Last week, after Meta's earnings report triggered a sharp drop in stock prices, Wall Street had doubts about the sustainability of this artificial intelligence craze; ② However, after Microsoft and Alphabet then handed over excellent quarterly report responses, the market's suspense clearly let go once again. Many analysts expect the market's enthusiasm for artificial intelligence to continue...
Last week, at$Meta Platforms (META.US)$After the release of earnings reports triggered a sharp drop in stock prices, Wall Street once raised doubts about the sustainability of this artificial intelligence boom.
However, after that$Microsoft (MSFT.US)$und$Alphabet-A (GOOGL.US)$After handing over the excellent quarterly report questionnaire, the market apparently let go of its suspense once again. The strong performance of these two companies suggests that Meta's collapse may be just a minor episode, and the story of artificial intelligence is far from over.
As people's confidence returns, many analysts expect the market's enthusiasm for artificial intelligence to continue!
Microsoft and Google turn the tide
After the market on Wednesday EST, Meta announced an increase in its capital expenditure plan for this year in its latest financial report. CEO Zuckerberg also emphasized the “long-term” nature of investing in artificial intelligence, causing the market to begin to worry about the return prospects of this technology. Some analysts even bluntly said that Meta's collapse shook the theoretical core of investing in artificial intelligence and made people doubt the story of artificial intelligence.
This concern caused Meta shares to plummet 12% on Thursday and dragged down AI-related technology stocks in major global markets.
Fortunately, just one day later, Microsoft and Alphabet announced excellent quarterly results, and Rubrik's strong initial public offering (IPO) performance, put the AI narrative back on track and rekindled people's confidence.
Alphabet shares surged to a record high on Friday, closing for the first time at more than $2 trillion. Microsoft shares closed up 1.8%, with a market capitalization slightly above $3 trillion.
“The story of investing in artificial intelligence is complete,” said Yung-yu Ma, the US chief investment officer of BMO Wealth Management.
The outstanding performance of Microsoft and Alphabet, as well as Tesla's stock price rebound, propelled the S&P 500 index and the Nasdaq index to record their best weekly performance since this year.
Nicole Inui of HSBC said: “They are making a profit... This is a story of long-term growth, and we think the industry will continue to be strong in the second half of this year.”
Microsoft and Google have teamed up to tell a great story
As far as the market is concerned, the performance of Microsoft and Google is not only strong, but more importantly, they gave Wall Street an initial understanding of how artificial intelligence will drive growth in the next few years: Microsoft said that artificial intelligence services account for 7 percentage points of the 31% revenue growth in its Azure cloud division; while Google emphasized that the contribution of artificial intelligence to performance continues to increase, helping Google's cloud revenue increase 28% year over year.
“Google and Microsoft reviews tell us that the demand for artificial intelligence is real,” said Rishi Jaluria (Rishi Jaluria), a capital markets analyst at the Royal Bank of Canada. “It's not just hype, it's not just about people talking about it. There is actual capital put into operation.”
Bank of America analyst Michael Hartnett wrote in the report that until the threat of a recession becomes a reality, “the market leadership of large growth stocks will remain the same.”
And even after Meta plummeted, there were voices in the market that were optimistic about Meta's application of artificial intelligence to drive transformation.
According to Brad Erickson (Brad Erickson), an internet analyst for capital markets at the Royal Bank of Canada, the sell-off in stock prices after the release of Meta earnings report was only an “excessive reaction” of the market. He's still optimistic that artificial intelligence will be Meta's “transformation driver,” so “we'll buy it.”
After the “Big Four” announced financial reports, Amazon and Apple will announce key results this week. These two performance reports will be the next key test the artificial intelligence concept will face.
Editor/Jeffrey