Amazon.com Inc., Microsoft Corp. and Alphabet Inc. had one job heading into this earnings season: show that the billions of dollars they’ve each sunk into the infrastructure propelling the artificial intelligence boom is translating into real sales.
Dan Morgan, senior portfolio manager at Synovus Trust, joins BNN Bloomberg to discuss the latest Amazon earnings results for Q2.
Silicon Valley hailed 2024 as the year that companies would begin to deploy generative AI, the type of technology that can create text, images and videos from simple prompts. This mass adoption is meant to finally bring about meaningful profits from the likes of Google’s Gemini and Microsoft’s Copilot. The fact that those returns have yet to meaningfully materialize is stoking broader concerns about how worthwhile AI will really prove to be.
“It’s really a positive indicator when we step up capital expenditures,” Amazon Chief Financial Officer Brian Olsavsky said while working to assure investors and analysts on a call Thursday. Wall Street’s concerns about capital expenditures, which totaled $13.2 billion in the quarter, overshadowed better-than-expected sales. Shares fell five per cent the day after the results.
One company that has bucked trend is Facebook parent Meta Platforms Inc. The company unexpectedly raised its forecast for capital expenditures, citing AI investments, but it’s second-quarter revenue also beat expectations. CEO Mark Zuckerberg credited spending on AI with driving improvements in ad targeting and content recommendations.
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