New York CNN —
Silicon Valley’s biggest names are trying to figure out whether their massive artificial intelligence investments are paying off or just wasting cash. And the timing couldn’t be more ominous.
In what some analysts are calling the “show-me-the-money” quarter, most major U.S. tech companies are expected to report earnings during Halloween week. Google’s parent company Alphabet began operations on Tuesday, followed by Microsoft and Meta on Wednesday. The grand finale will come on Halloween, when Apple and Amazon will announce their third quarter results. Meanwhile, Nvidia reports that Thanksgiving on November 20th is approaching.
“Tech companies have been spending billions of dollars on AI like kids in a candy store,” said David Rout, chief investment officer at Abound Financial. “Investors now want to know what they are getting for their money.”
The tech industry’s earnings season got off to a strong start Wednesday night as Tesla surprised Wall Street with better-than-expected earnings. The electric car maker was able to boost profits by reducing manufacturing costs per vehicle by $2,400 year-over-year, despite competing on price with competitors. The results sent Tesla shares soaring more than 11% in after-hours trading, potentially providing a brighter tone for next week’s parade of tech company earnings.
But the stakes are still high for the remaining so-called Great Seven. Nvidia, the company that makes the chips driving the AI boom, is now worth more than the combined Canadian and French stock markets.
The pressure may be strongest on Google and Microsoft, the two companies vying for AI supremacy. Google needs to prove its AI tools are attracting paying business customers, while Microsoft needs to show its multibillion-dollar partnership with ChatGPT maker OpenAI is generating real revenue. We are aiming for
Meanwhile, Meta is betting that AI can add some fuel to its struggling advertising business, and Amazon is trying to convince investors that AI is driving growth in the cloud. It is said that
But there’s more to Wall Street than just tech profits. Markets are growing nervous ahead of next week’s Federal Reserve meeting, where officials are expected to signal whether they will raise interest rates further. With the presidential election drawing ever closer and geopolitical tensions rising, investors have plenty of reasons to be concerned.
“After six straight weeks of gains, the long-awaited fall in a close election race is probably here,” Deutsche Bank’s Jim Reid wrote in a note last week.
For the average investor, the coming weeks could make or break a tech-heavy portfolio.
“We think tech stocks could rise another 20% in 2025 if companies show that AI is actually delivering benefits,” said Dan Ives, an analyst at Wedbush Securities. ” he said.
By Halloween night, when trick-or-treating rolls around, investors will wonder whether Big Tech’s massive AI bet is finally starting to pay off, or whether the promise of artificial intelligence turns out to be more trick than reward. You will have a better understanding of what is going on.
