Shares of big tech companies have coasted through this year on AI euphoria, but as Microsoft Corp., Alphabet Inc. and Meta Platforms Inc. prepare to report results this week, some investors are starting to ask how much those AI advancements might actually cost. <\/p>\n
Those questions have surfaced after several months during simply saying \u201cAI\u201d on earnings calls appeared to be enough for investors. If the economy sours though \u2014 as some expect in the second half of this year or next year \u2014 big tech\u2019s AI ambitions could go with it.<\/p>\n
\u201cGiven the exorbitant costs associated with the development, hosting and serving of AI products, many investors are concerned about the potential for [fiscal 2024] commentary regarding a material increase,\u201d Jefferies analyst Brent Thill wrote, according to a MarketWatch earnings preview for Microsoft\u2019s Microsoft and Alphabet Inc. GOOG, Still, for Microsoft, after a broader pullback in IT spending earlier this year, analysts have found more to like about its cloud-computing business \u2014 namely market-share gains, generally-sturdy demand, and whatever ways AI can fit into the equation. Wolfe Research analyst Alex Zukin, in a recent note, said he believed \u201cthe focus will turn from what is good enough, to how good can it be,\u201d as Microsoft moves deeper into AI. <\/p>\n \u201cHow good can it be?\u201d might also be a question for Meta Shares of the social-media company have more than doubled in value so far this year. JMP analyst Andrew Boone, in a recent note, cited likely improvements in Meta\u2019s digital ad segment, better engagement, and a broader advertising backdrop that \u201cappears to be stable\u201d after a slowdown in spending, Still, there are signs that the initial user attraction to Threads, Meta\u2019s answer to Twitter, has fizzled. <\/p>\n For the week ahead, 166 companies in the S&P 500 index report results, including 12 from the Dow, according to FactSet. Among them are Domino\u2019s Pizza Inc. Quick-service restaurant chains Chipotle Mexican Grill Inc. Visa, Mastercard:<\/strong> Earlier this month executives from the big banks said U.S. consumers are generally doing OK despite still-rampant inflation, although perhaps less OK than in prior months. This week credit-card giants Visa Inc. and Mastercard Inc. report results on Tuesday and Thursday, respectively. The profit, sales and credit-card volume figures from Visa Shares of Visa and Mastercard are up so far this year, but some analysts said there could be more room investors to step in. SVB MoffettNathanson analyst Lisa Ellis recently said shares of both companies were hovering at \u201cunusually attractive\u201d levels. <\/p>\n
\n MSFT,
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\n results.<\/p>\n
\n GOOGL,
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\n which both report on Tuesday, have been in heated competition in the world of online search and digital advertisements, as Microsoft leans more on its massive investments in research lab OpenAI to muscle up its own search capabilities. But a Deutsche Bank analyst said that so far, Google appears to have the upper hand in that battle. <\/p>\n
\n META,
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\n which reports second-quarter results on Wednesday. <\/p>\nThis week in earnings<\/h2>\n
\n DPZ,
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\n which now plans to deliver pizza via Uber Eats after years of chafing at third-party delivery apps. Industrials General Electric Co.
\n GE,
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\n and 3M Co.
\n MMM,
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\n also report, after 3M agreed to pay $10.3 billion to settle accusations it was responsible for so-called \u201cforever chemicals\u201d in drinking water. <\/p>\n
\n CMG,
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\n and McDonald\u2019s Corp.
\n MCD,
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\n also report, with BofA analysts expecting an \u201calmost normal\u201d quarter for the industry, after spending at chain restaurants grew last month and costs for some ingredients started to ease following two years of supply disruptions. Auto makers General Motors Co.
\n GM,
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\n and Ford Motor Co.
\n F,
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\n also report, and while parts shortages that have constrained vehicle production have shown signs of fading, so has electric-vehicle \u201ceuphoria.\u201d<\/p>\nThe calls to put on your calendar<\/strong><\/h2>\n
\n V,
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\n and Mastercard
\n MA,
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\n will offer more specifics on consumer spending, as vacations and concerts compete with more expensive and more pressing needs, like groceries and other bills. <\/p>\nThe number to watch<\/h2>\n