Big Tech earnings to test AI boom as market turmoil clouds outlook
QQQ•Amazon, Microsoft and Alphabet are expected to report accelerating cloud growth this week as investors assess whether AI returns can justify spending of as much as $600 billion this year. Their combined backlog is nearly $1.7 trillion.
1. Investors seek AI returns
Amazon, Microsoft and Alphabet are expected to report accelerating cloud growth this week, but market turbulence and concerns over financing AI investment are clouding the outlook. The three companies plan to spend as much as $600 billion this year and have a combined backlog of nearly $1.7 trillion.
2. Cloud growth forecasts
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 and Amazon are expected to burn cash for the second and third consecutive quarters, respectively; Microsoft is likely to generate more than $8 billion in cash flow.
3. Search and reporting changes
Alphabet's search revenue growth is expected to slow to 14.7% from 16.8%, while total revenue is forecast to rise 25.2% to $128.18 billion. Microsoft will report under a revamped structure and disclose Azure's quarterly revenue, which analysts expect to reach $33.06 billion. Amazon's overall revenue growth is expected to slow to 12.3% from 19.6%.
