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

📆 2024-07-30 12:24:00
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Investors will be scrutinizing the AI spending levels of tech titans like Microsoft when they report earnings this week.

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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