Big US tech stocks swing as investors probe AI spend
Summary
Big US technology companies like Meta, Alphabet, Microsoft, and Amazon all reported their financial results for the first quarter of the year. Investors reacted strongly as these companies plan to spend a huge amount of money on artificial intelligence (AI), causing their stock prices to rise or fall based on how well the AI investments seem to be paying off.Key Facts
- Meta, Alphabet, Microsoft, and Amazon all released their first-quarter earnings on the same day.
- These companies plan to spend over $500 billion on AI projects this year.
- Meta’s shares dropped more than 5% after it announced higher AI spending and job cuts to balance costs.
- Alphabet’s stock increased nearly 6% after strong profit growth and a 63% rise in its Google Cloud business, driven by AI use.
- Microsoft’s revenue and profits grew, but its cash flow dropped by almost $6 billion due to AI spending; its stock fell by nearly 2%.
- Microsoft’s CEO said its AI business annual run rate reached $37 billion, a projection of future sales.
- Amazon’s shares fell as it forecasted lower earnings next quarter despite a 15% profit increase and 28% growth in its cloud business.
- Amazon is expanding its own AI chip manufacturing, projecting a $20 billion annual run rate for that business.
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