What Wall Street learned from the week's Big Tech earnings flurry

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Latest quarter results from megacap technology stocks signaled to investors that hefty AI investments may be showcasing some long overdue rewards.

Reporting season from megacap technology stocks this week signaled to investors that hefty investments on networks and infrastructure needed to feed the growing boom in artificial intelligence may be starting to bear fruit in terms of profits. Earlier this year, concern that the payoff from enormous spending on AI will be pushed back dented investor sentiment and fueled a selloff in some of the biggest AI plays.

mountain Meta, 5 days Commentary from some of the tech companies signaled that AI demand remains robust. Microsoft's finance chief said that demand is outpacing capacity, anticipating as much as 32% growth in the Azure cloud-based platform on a constant currency basis in the December quarter. Alphabet CEO Sundar Pichai said its "full stack" of AI products is operating at scale.

mountain Alphabet, 5 days "People were betting against big tech making their numbers," said Ray Wang, principal analyst and founder at Constellation Research. "What they showed was that they still have the size and the scale to crank out earnings because their cost of sale is much lower and size and scale matters.

mountain Amazon, 5 days Meanwhile, the still enormous spending patterns among megacap technology companies signals no downturn for de facto AI leader Nvidia. Since the launch of ChatGPT in late 2022, the stock has soared more than seven-fold, lifting the broader market and technology sector alongside. But that growth rate could ease once the initial AI buildout cycle slows, making way for the next wave of companies putting AI to use, such as potentially Oracle and Salesforce , Wang said.

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