Alphabet (GOOG, GOOGL) and Microsoft (MSFT) both reported quarterly results that beat Wall Street expectations. What are the big takeaways from both reports? Baird Technology Desk Sector Strategist Ted Mortonson and RBC Capital Markets Software Equity Analyst Rishi Jarulia agree that generative artificial intelligence They appear and say that companies are investing in it.
“I think the comments from Google and Microsoft speak to the fact that there's a real demand for AI… There's real money behind this. It's not just hype. We're not just talking about it, we're actually putting capital into action,” Jallia told Yahoo Finance's Morning Brief.
Mortenson agrees. “We're really in the process of building a multi-generational infrastructure,” Mortonson said, adding that both Microsoft and Alphabet “already have data center footprints.” There are “advantages,” he added.
Jarria said investors “will be patient” with Microsoft's massive infrastructure spending as long as Microsoft's AI business continues to grow. As for why investors aren't too happy with META's AI investment, Mortenson believes it comes down to a “positioning game.” “Meta was very busy going into publishing, and frankly some people don't like some of the unprofitable expenditures,” Mortenson said. He said Meta is “very attractive” given how hard the stock took a hit on the earnings call, but believes Microsoft has a “huge advantage” because of its enterprise business.
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This post was written by Stephanie Mikulich.
