The results of both Microsoft and Meta Platforms have primarily shown three things. First, the ‘AI revolution’ is real and both companies are seeing an obvious, positive impact on their financial results. This is borne not only from new products but also from the potential that artificial intelligence offers. Secondly, very strong financial results (following excellent reports from Alphabet and Tesla) are building a very optimistic view of the business conditions of the biggest tech companies.
This cannot be said for all the firms in Wall Street where the results season is largely disappointing. Thirdly, market reactions suggest that American company valuations have reached at least the level where even very strong financial reports and clearly exceeded expectations are no longer enough to stimulate demand. It may be increasingly difficult for companies to meet the bar, not only the official one built by average analyst expectations; but also the less visible one in the minds of millions of investors.
Microsoft impressed with the growth dynamics of its cloud business Azure. Meta Platforms showed strong growth in active users, which have grown close to 3.3 billion people in their applications. This group forms the ‘foundation’ which Zuckerberg’s company will gradually monetize, passing it through various AI tools to increase profitability from services and advertisements. Furthermore, both firms have increased their annual CAPEX. This shows one thing: they do not intend to freeze investments in AI. The question is, will this be enough for the bull market in Nasdaq to last forever? For a moment, the market could have ‘gorged’ itself on tech giant securities.
Author: Eryk Szmyd, Analyst at XTB
Source: https://ceo.com.pl/microsoft-i-meta-pokazuja-ze-rewolucja-ai-jest-realna-ale-czy-to-wystarczy-by-podtrzymac-hosse-na-nasdaq-36297
