Big Tech companies Microsoft (MSFT), Google (GOOG, GOOGL), Meta, and Amazon (AMZN) — members of the recently crowned “Magnificent Seven” stocks — are due to report corporate earnings this week. Yahoo Finance Tech Editor Dan Howley takes a pulse of investor expectations on tech earnings.
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Video Transcript
RACHELLE AKUFFO: Invest as a shifting focus to big tech earnings this week with Alphabet, Microsoft, Meta, and Amazon all on tap this week. So what should you be expecting? Yahoo Finance’s tech editor Dan Howley has those details for us. A big week here, Dan.
DAN HOWLEY: That’s right, Rachelle. This is a huge week. And the two big themes that I think people are going to be looking at are A, the cloud and how AI fits into those kinds of measurements. And B, the digital ads market. So let’s start with A, AI and the cloud because we’re going to get Microsoft and Google tomorrow after the bell.
The big question here is, how are these big investments that these companies are discussing fitting into their overall revenue when it comes to their cloud performance? So the AI themselves the co-pilots that Microsoft has and the AI that Google is offering, those are being fitted into their respective cloud capabilities.
And so when you go out and you would purchase something like this for your business, you would be then signing up for an additional cost for access to their AI capability. So we’re hoping to get some kind of inkling as to how much that’s impacting the overall revenue share when it comes to their cloud offerings.
And then B, the digital ad market. Now Google is also a part of that, one of the biggest. And then Meta as well. And we want to get a sense of where the digital ad market is right now. Is it picking back Up There’s some analysts expect it to improve this quarter, the quarter that we’re seeing reported. So that would bode well for both Meta and Google, which, again, is a massive player there.
As well as Amazon because of their growing advertising business. The cloud also being a big deal for Amazon as well. We’d like to know more about how their own AI capabilities are extending into the cloud services. But I think it’s important to point out that they’ve been on board with building their own chips and such for some time. So they’ve kind of been working in this space for a while. So we’ll get maybe a bigger call out from them just to kind of show that Amazon is still working on AI, is a big player, and so maybe we’ll get some of that there.
So I think those are really the two major themes we’re going to be seeing. You can expect plenty of analysts on these calls to just repeatedly ask what’s going on with AI, what’s going on with the ad market as well. And then maybe we’ll get something from Amazon as far as how its recent sales event went in October, whether it saw an uptick in consumer spending, whether it saw more signups for Prime. So we’re going to be looking for that as well.
RACHELLE AKUFFO: And then ahead of that, I mean, we’re seeing this call from a Morgan Stanley analyst about Amazon and Google and the potential for the GPU infrastructure market. What do we know about that so far?
DAN HOWLEY: Yeah. They’re basically saying here that they could add as much as $50 billion to their revenue by renting out availability of their own NVIDIA GPUs and giving people access to that. Their infrastructure as a service is what it’s called IaaS. And it’s not unheard of for companies to do this.
They also, by the way, are working on their own chips. Google, they have some already. Amazon has some already. So there’s also the possibility that they could be renting out those as well for AI capabilities for different companies who need them, but can’t get access to chips either because they’re just not available and everyone else is buying them up, or because they’re simply too expensive for them. So this could be a good alternative for companies that need those capabilities. And it could pay off handsomely for these companies in the long run.
