Over the next two weeks, the quarterly results of tech giants would offer a glimpse of the bankability of artificial intelligence (AI) and whether the major investments AI requires are sustainable for the long haul.
Analysts at Wedbush Securities Inc, one of Wall Street’s biggest believers in AI’s potential, expect “growth and earnings to accelerate with the AI revolution and the wave of transformation” it is causing.
The market generally agrees with this rosy AI narrative. Analysts forecast double-digit growth for heavyweights Microsoft Corp and Google, in contrast to Apple Inc, a latecomer to the AI party, with only 3 percent growth expected.
Photo: Reuters
The iPhone maker, which releases its results on Thursday next week, unveiled its new Apple Intelligence system only last month and plans to roll it out gradually over the next months, and only on the latest models.
CFRA Research analyst Angelo Zino said Apple’s upcoming earnings would show improvement in China sales, a black spot since last year.
“Apple’s forecasts for the current quarter will be important” in assessing the company’s momentum, he added.
Zino said he was a little bit more concerned about Meta Platforms Inc, which raised its investment projections in April last year as it devoted a few billion dollars more on the chips, servers and data centers needed to develop generative AI.
CFRA expects Meta’s growth to decelerate through the end of the year. Combined with the expected increase in spending on AI, that should put earnings under pressure.
As for the earnings of cloud giants Microsoft (which is to release its results on Tuesday next week) and Amazon (which is to release its results on Thursday next week), “we expect them to continue to report very good results, in line with or better than market expectations,” Zino said.
Microsoft is among the best positioned to monetize generative AI, having moved the fastest to implement it across all its products, and pouring US$13 billion into OpenAI, the start-up stalwart behind ChatGPT.
Winning the big bet on AI is “crucial” for the group, Emarketer analyst Jeremy Goldman said, “but the market is willing to give them a level of patience.”
The AI frenzy has helped Microsoft’s cloud computing business grow in the double digits, something that analysts said could be hard to sustain.
“This type of growth cannot hold forever, but the synergies between cloud and AI make it more likely that Microsoft holds onto reliable cloud growth for some time to come,” Goldman said.
As for Amazon.com Inc, “investors will want to see that the reacceleration of growth over the first quarter wasn’t a one-off” at Amazon Web Services (AWS), the company’s world-leading cloud business, Hargreaves Lansdown PLC analyst Matt Britzman said.
Since AWS leads “in everything data-related, it should be well placed to capture a huge chunk of the demand coming from the AI wave,” Britzman said.
The picture “might be a little less clear” for Google parent Alphabet Inc, which would be the first to publish results on Tuesday, “because of their search business” online, Zino said.
“Skepticism around AI Overviews,” introduced by Google in mid-May, “is certainly justified,” Emarketer analyst Evelyn Mitchell-Wolf said.
This new feature, which offers a written text at the top of results in a Google search, ahead of the traditional links to sites, got off to a rocky start.
Internet users were quick to report strange, or potentially dangerous, answers proposed by the feature that had been touted by Google executives as the future direction of search.
Data compiled by BrightEdge and relayed by Search Engine Land showed that the number of searches presenting a result generated by AI Overviews has plummeted in recent weeks as Google shies away from the feature.
Still, many are concerned about the evolution of advertising across the Internet if Google pushes on with the Overviews model, which reduces the necessity of clicking on links. Content creators, primarily the media, fear a collapse in revenues.
“As long as Google maintains its status as the default search engine across most smartphones and major browsers, it will continue to be the top destination for search, and the top destination for search ad spending,” Mitchell-Wolf said.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) secured a record 70.2 percent share of the global foundry business in the second quarter, up from 67.6 percent the previous quarter, and continued widening its lead over second-placed Samsung Electronics Co, TrendForce Corp (集邦科技) said on Monday. TSMC posted US$30.24 billion in sales in the April-to-June period, up 18.5 percent from the previous quarter, driven by major smartphone customers entering their ramp-up cycle and robust demand for artificial intelligence chips, laptops and PCs, which boosted wafer shipments and average selling prices, TrendForce said in a report. Samsung’s sales also grew in the second quarter, up
On Tuesday, US President Donald Trump weighed in on a pressing national issue: The rebranding of a restaurant chain. Last week, Cracker Barrel, a Tennessee company whose nationwide locations lean heavily on a cozy, old-timey aesthetic — “rocking chairs on the porch, a warm fire in the hearth, peg games on the table” — announced it was updating its logo. Uncle Herschel, the man who once appeared next to the letters with a barrel, was gone. It sparked ire on the right, with Donald Trump Jr leading a charge against the rebranding: “WTF is wrong with Cracker Barrel?!” Later, Trump Sr weighed
HEADWINDS: Upfront investment is unavoidable in the merger, but cost savings would materialize over time, TS Financial Holding Co president Welch Lin said TS Financial Holding Co (台新新光金控) said it would take about two years before the benefits of its merger with Shin Kong Financial Holding Co (新光金控) become evident, as the group prioritizes the consolidation of its major subsidiaries. “The group’s priority is to complete the consolidation of different subsidiaries,” Welch Lin (林維俊), president of the nation’s fourth-largest financial conglomerate by assets, told reporters during its first earnings briefing since the merger took effect on July 24. The asset management units are scheduled to merge in November, followed by life insurance in January next year and securities operations in April, Lin said. Banking integration,
LOOPHOLES: The move is to end a break that was aiding foreign producers without any similar benefit for US manufacturers, the US Department of Commerce said US President Donald Trump’s administration would make it harder for Samsung Electronics Co and SK Hynix Inc to ship critical equipment to their chipmaking operations in China, dealing a potential blow to the companies’ production in the world’s largest semiconductor market. The US Department of Commerce in a notice published on Friday said that it was revoking waivers for Samsung and SK Hynix to use US technologies in their Chinese operations. The companies had been operating in China under regulations that allow them to import chipmaking equipment without applying for a new license each time. The move would revise what is known
RSS