Big Tech Earnings Season Concludes with Focus on AI

With only Amazon and Nvidia remaining to report their quarterly performance, Big Tech's earnings season is nearing its end. Despite mixed results from major Silicon Valley players, artificial intelligence (AI) emerged as a key theme for Wall Street.

Missed Revenue Targets and Disappointments

Microsoft (MSFT) fell short of cloud revenue expectations, Meta (META) projected slower sales growth, Apple (AAPL) missed iPhone revenue estimates, and Google (GOOG, GOOGL) disappointed with cloud growth. External factors such as trade tariffs and the rise of DeepSeek's low-cost AI models have also impacted results.

AI Bets Drive Optimism

Despite these setbacks, analysts remain optimistic, emphasizing Big Tech's long-term AI investments. UBS's Chief Investment Office team noted that the initial tech earnings results were reassuring and the AI growth story remained intact.

Nvidia's Earnings a Key Indicator

Nvidia (NVDA), a bellwether for the AI industry, will report earnings on February 26. An earnings miss or negative outlook could derail AI stocks.

Microsoft: Cloud Expansion and AI Growth

Microsoft's cloud revenue missed expectations, partially attributed to demand outpacing capacity. However, AI services grew significantly, contributing to Azure's overall growth. The company plans to expand its cloud capacity to meet customer demand by fiscal 2025.

Meta: Heavy AI Investments and Llama AI Model

Meta declined to provide full-year guidance but highlighted opportunities from its substantial AI investments. The company plans to spend over $65 billion on AI this year, including the launch of its next-generation Llama 4 AI model.

Google: Cloud Spending and AI Expansion

Google's parent company, Alphabet, saw its stock decline after missing cloud revenue targets. Similar to Microsoft, Google cited high demand for cloud services and plans to invest $75 billion in AI development in 2025.

Apple: AI Platform and iPhone Sales

Apple reported strong earnings but missed iPhone revenue expectations. The company's Apple Intelligence AI platform fell short of boosting iPhone sales, hampered by limited language availability. However, the platform has shown promise and is expected to drive upgrades in additional regions.

AI Promises and Execution

Big Tech companies now face the challenge of fulfilling their AI promises. With Nvidia's earnings on the horizon, the industry will continue to monitor the progression of AI in the tech sector.