Microsoft, Amazon, Apple, Meta and Alphabet – Google’s parent company – have the impatient eyes of investors on them. Even after having boosted its profits by 17% in interannual terms in their September presentations – from 172,013 million to 201,855, although in the case of Apple and Microsoft with longer analysis periods than their competitors -, the bigtech They have the big capitals of Wall Street waiting for signs of the great impact that Artificial Intelligence (AI) is expected to have on the accounts of the five big technology firms. All five have presented results this week, although still needs to be added Nvidia has scheduled its results presentation for the end of this month.
In response to doubts, Big technology companies have redoubled their bet. The capital expenditures of the four largest Internet and software companies – Amazon, Microsoft, Meta and Alphabet – will far exceed the $200 billion this yeara sum that breaks all records.
Senior executives at these companies warned this week that the pharaonic displayIn addition, it will not only slow down, but will increase next year. Additionally, they offered brief glimpses of the benefits they are reaping from their headlong rush toward generative AI, arguing that this technology is boosting the performance of basic services and helping to keep operating costs low.
The avalanche highlights the extreme costs and resources consumed by the global rise of AI, which the arrival of ChatGPT has contributed to. The technology giants are rushing to obtain the scarce high-end chips necessary to process the information they demand this technology; and to build the huge data centers they demand. Something for which these companies are closing more and more agreements with energy suppliers to power their facilities with high electricity consumption 24 hours a day, which has even led to Microsoft to reactivate a nuclear power plant in the USA.
Thanks to such deployment, investors want to see results. The price of large firms has been punished throughout this week, since the forecasts for growth in profits They were around 19%figures that, although they far exceed the increase of 4.3% expected for S&P500 firms; represent its increase more content in six quartersas detailed by Bloomberg.
Waiting for signs
One of the signs that demand for generative AI was starting to pick up was the growth rates of Microsoft and Google’s cloud divisions. Nevertheless, optimism dissipated when the firm founded by Bill Gates warned that cloud growth would decline this quarter, in largely due to supply limitations.
For its part, Amazon Web Services, which leads the cloud market, did not meet the most optimistic expectations regarding improvements of their own growth.
At Thursday’s analyst conference, Amazon CEO Andy Jassy called AI an “unusually large, perhaps once-in-a-lifetime opportunity,” as evidenced by his company’s projection of record spending of $75 billion by 2024.
A day earlier, Mark Zuckerberg, CEO of Meta, committed to increasing investment in AI linguistic models and other futuristic projects that he considers essential for the future of his company, according to the US financial agency. Meta’s capital expenditure could amount to 40 billion dollars this year. For his part, Alphabet CFO Anat Ashkenazi anticipated increases “substantial” in it capex by 2025.
Green shoots and shadows
Precisely, Alphabet stated that the new generative AI functions of its search engine are increasing the participation and promoting use. Despite this, Google’s search volume growth declined compared to the previous quarter, raising concerns question of how strong the effect of AI has been.
However, Microsoft stated that its revenue from AI was about to reach 10 billion dollars annuallya milestone faster than any other business in its history.
For its part, Apple offered cautious forecasts for the crucial Christmas quarter, given the uncertainty about how the deployment of new artificial intelligence functions will translate into the sales of iPhones and other devices complicated quarterly results that, otherwise, They would have been solid.
In this context, the prices of bigtech companies have suffered downward corrections, which has not prevented them from reaching valuations above historical averages. Apple trades at 32 times estimated profits for the next 12 months, compared to an average of 20 times over the last decade, according to data compiled by Bloomberg. For its part, Microsoft trades at 33 times.
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