A big cloud hangs over Big Tech earnings: Is all this AI spending worth it?

A crucial question looms over the busy slate of Big Tech earnings that kicks off Tuesday night: Is the massive spending on generative artificial intelligence generating the returns that justify the investment? Club holding Alphabet 's second-quarter report last week – which featured hefty capital expenditure outlays and guidance that they will continue – rekindled the debate about AI's short-term impact on profits and the timeline to see a substantial financial lift.

Not only did its cloud-computing arm Google Cloud demonstrate revenue growth of 29%, but management said its newly launched AI Overviews are boosting engagement for its key search-engine business. While those details weren't enough to quell concerns about overspending, we found them encouraging and supportive of our multiyear optimism on AI.

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Stock market today: World stocks fall as investors are underwhelmed by Big Tech earningsWorld stocks are lower as the earnings reporting season ramps up for big companies.
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Stock market today: World stocks fall as investors are underwhelmed by Big Tech earningsWorld stocks are lower as the earnings reporting season ramps up for big companies.
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Investors Rotate Out of Big Tech Right Before Earnings - Sign of What's to Come?Stocks Analysis by Christine Short covering: Nasdaq 100, S&P 500, Dow Jones Industrial Average, Walt Disney Company. Read Christine Short's latest article on Investing.com
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