Tech giants Amazon, Apple, Meta and Microsoft this week eclipsed earnings expectations, cashing in on artificial intelligence (AI) while navigating economic waters roiled by US tariffs.
“Massive results seen by Microsoft and Meta further validate the use cases and unprecedented spending trajectory for the AI Revolution on both the enterprise and consumer fronts,” Wedbush tech analyst Dan Ives said in a note to investors.
“We have barely scratched the surface of this 4th Industrial Revolution now playing out around the world led by the Big Tech stalwarts such as Nvidia, Microsoft, Palantir, Meta, Alphabet, and Amazon,” Ives added.
Amazon reported a 35 percent jump in quarterly profits as the e-commerce giant said major investments in AI technology are paying off.
“Our conviction that AI will change every customer experience is starting to play out,” said Chief Executive Andy Jassy, pointing to the company’s expanded Alexa+ service and new AI shopping agents.
But the Seattle-based company’s profit outlook for the current quarter came in lower than hoped for, with investors worried that the cost of AI was weighing on the bottom line.
This was despite a stellar second quarter that exceeded analyst expectations, much like it did for its AI-focused rivals Google, Microsoft and Meta, which posted bumper results for the period.
Amazon’s net sales climbed 13 percent, signaling that the company was so far surviving impacts of the high-tariff trade policy under US President Donald Trump.
Amazon Web Services (AWS), the company’s world-leading cloud computing division, led the charge with sales jumping 17.5 percent to $30.9 billion.
Its strong performance reflects surging demand for cloud infrastructure to power AI applications, a trend that has benefited major cloud providers as companies race to adopt generative AI technologies.
– $4 trillion club –
Shares of Microsoft spiked Thursday following blowout quarterly results, lifting the tech giant into the previously unprecedented $4 trillion club along with Nvidia, another AI standout.
The landmark valuation is the latest sign of growing bullishness about an AI investment boom that market watchers believe is still in the early stages — even as companies like Microsoft plan $100 billion or more in annual capital spending to add new capacity.
“Cloud and AI is the driving force of business transformation across every industry and sector,” said Microsoft CEO Satya Nadella.
At the heart of the results was a stunning surge in Azure, the company’s cloud computing platform, which is getting “supercharged” with AI, said Angelo Zino, technology analyst at CFRA Research.