Tech giants Microsoft, Google (Alphabet), Amazon, and Meta Platforms will announce earnings this week and next. These companies, with a combined value over $6 trillion, are on investors’ radar.
Major U.S. technology giants may see an end to their cloud business slowdown as the economy shows signs of resilience, encouraging clients to invest more in technology. The increase in digital advertising will also boost their profits.
This week and the next, companies like Microsoft, Google’s Alphabet, Amazon, and Meta Platforms, worth over $6 trillion, will announce their earnings. These reports will test their high valuations and the impact of AI optimism on the market.
Canaccord Genuity analyst Kingsley Crane believes that finding metrics showing increasing user interest in AI-based products is crucial. These products are projected to generate substantial revenue ahead.
Throughout this year, the four companies have integrated AI into their offerings to drive the industry’s growth. However, the results of these efforts will take time to materialize.
In the April-June quarter, Amazon, Microsoft, and Alphabet, the three biggest players in the cloud market, are likely to report disappointing growth in their cloud businesses. Amazon and Alphabet are likely to experience their lowest cloud computing growth rates ever: 9.8% and 24.4%. In contrast, Microsoft’s Intelligent Cloud, including Azure, is projected to grow at 13.7%, its slowest rate since 2017.
Despite the challenges, analysts believe the situation is improving. Rishi Jaluria, an analyst from RBC Capital Markets, stated that the overall market conditions are soft. However, they are not getting significantly worse, and companies are adapting to the situation.
Comparisons with the previous year will also be more favorable, as the cloud slowdown started in the September quarter of 2022.
A recent survey by RBC Capital revealed that more than 80% of enterprise technology buyers are funding projects related to generative AI, and they anticipate increased IT spending this year compared to 2022.
The digital ad market’s revival will also benefit Alphabet, as its Google Search has managed to maintain its market share and avoid significant losses to Microsoft’s AI-powered Bing. The Alphabet company expects its best performance in Q2, with a 4.5% revenue growth from April to June.
The analysts at BofA Global Research suggest that Google Search might face monetization challenges. However, its healthy market share indicates less urgency to integrate large-language model (LLM) results into commercial queries.
Microsoft and Alphabet will release their quarterly results on July 25, Meta on July 26, and Amazon on August 3.