Big Tech earnings test the AI boom amid market turmoil
Amazon, Microsoft and Alphabet are expected to report faster cloud growth on Wednesday, as investors weigh AI returns against rising financing costs and plans by the three companies to spend as much as $600 billion this year.
1. Cloud growth in focus
Wall Street expects Amazon, Microsoft and Alphabet to report faster growth in their cloud businesses on Wednesday. Their combined backlog is nearly $1.7 trillion, and the companies plan to spend as much as $600 billion this year.
2. AI spending concerns
Market turmoil and rising costs of financing AI infrastructure are tempering optimism. Investors are seeking evidence that AI can deliver returns to justify its cost, while concerns about spending have grown after Meta’s increased investment plans overshadowed better-than-expected revenue growth and an upbeat outlook.
3. Analyst expectations
Google Cloud revenue is expected to rise 95.1% to $29.57 billion in the September quarter, while Amazon Web Services revenue is forecast to grow 38.2% and Microsoft Azure 47.7%. Alphabet’s search revenue growth is expected to slow to 14.7%; Microsoft will disclose Azure’s quarterly revenue under a revamped reporting structure, with analysts expecting sales of $33.06 billion.
