The performance guidance of technology giants will "set the tone" for the expectations of the AI industry in the future.
The earnings report season for US stocks is about to enter a period of intensive disclosure, and the reports from AI-related giants are undoubtedly the market focus.
Next week, Microsoft, Alphabet-C, and Meta will release their performance reports. As giants in the fields of artificial intelligence, cloud computing, and digital advertising, their reports will influence market expectations and also have an impact on other technology companies such as Amazon and NVIDIA that will release their reports later.
In particular, Microsoft, as the current leader in the field of artificial intelligence, just announced the pricing of Office 365 Copilot last week.
If the market does not see meaningful revenue from these giants for a considerable period of time, so-called "concept stocks of artificial intelligence" may generally cool down, especially those stocks with higher speculation.
For AI-related equipment suppliers such as NVIDIA, Broadcom, and Arista Networks, the performance guidance of technology giants, especially in terms of expenses, will be crucial.
The content related to cloud computing in the reports of these three giants is crucial for Amazon because most of Amazon's profits rely on Amazon Web Services. In addition to the profitability of ServiceNow, they may also affect leading software companies such as Datadog, Dynatrace, Cloudflare, and MongoDB.
Currently, the market generally expects Alphabet-C to achieve a 9% profit growth this quarter after experiencing four consecutive quarters of decline, with the sales of its core search business possibly growing by 4%. The merger of DeepMind and Brain departments also helps accelerate the launch of new products related to large language models.
Microsoft's adjusted operating profit margin is expected to increase from 40% a year ago to 42%, as the emergence of artificial intelligence has pushed up the cost of handling workloads, and Microsoft protects its profit margin by raising prices. Jefferies pointed out that the pricing of Microsoft's recently announced AI assistant for enterprise customers is more than double the initial expectations.
After six consecutive quarters of decline, the market expects Meta to resume growth in the second quarter, with earnings per share expected to increase by 19%.
Analysts believe that earlier this month, the popularity of Meta's newly launched "Twitter killer" app Threads exceeded that of ChatGPT, thanks to Meta's existing user base on Instagram. This new app is expected to bring billions of dollars in revenue to Meta in the coming years.