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Editor’s Note: Big Tech’s AI spending faces its biggest test of the year this week. Meanwhile, the next wave of AI is already taking shape on factory floors. I call it Phase 3 AI.
Go here for my 5 favorite stocks for it.
Thursday was the Nasdaq’s worst day since June.
The index fell 3%, and chip stocks dropped 7%. Investors want to know if all the money going into AI is paying off.
This week, the biggest spenders will tell us.
Microsoft, Alphabet and Amazon all report in the next five days. Along with Meta, they’re on pace to spend $700 billion to $900 billion on AI infrastructure this year.
Meta showed how touchy investors are right now. It beat estimates last week, yet the stock fell about 7%. Meta raised the low end of its spending forecast to $135 billion to $145 billion. It also has about $825 billion in total spending commitments.
Some of that money is starting to flow into robots and smart machines. Discover my top 5 stocks for Phase 3 AI.
Here are the five reports I’m watching most closely.
Microsoft (NASDAQ: MSFT): Wednesday after the bell. Wall Street expects $4.71 per share, up from $4.13 a year ago. Microsoft guided to $89.85 billion to $90.95 billion in revenue. The number to watch is Azure, its cloud business. In July, management expected Azure to grow about 45%, excluding currency moves.
Alphabet (NASDAQ: GOOGL): Wednesday after the bell. The consensus is $2.94 per share. Google Cloud grew 82% last quarter. If that pace holds, it’s strong proof that AI spending is turning into sales.
Amazon (NASDAQ: AMZN): Thursday after the close. Amazon expects $197 billion to $202 billion in sales. Analysts expect $2.01 per share. Watch AWS. Its growth sped up to 37% in the second quarter, the fastest in 18 quarters.
Intel (NASDAQ: INTC): Thursday after the bell. The forecast is $0.28 per share, more than double the $0.11 it earned a year ago.
Sandisk (NASDAQ: SNDK): Thursday after the bell. This is the biggest jump on the calendar. Wall Street is looking for $45.22 per share. A year ago, Sandisk earned $0.90.
The Fed also announces its rate decision on Wednesday. Traders now see only about a 5% chance of a hike. In late September, those odds were 37%.
Thursday’s selloff priced in a lot of fear. If cloud growth at Microsoft, Alphabet and Amazon holds up, that fear could fade fast. I’d rather be ready for that move than chase it.
Chatbots and AI agents drove the first two phases of the AI boom.
Phase 3 is AI that works in the physical world, from humanoid robots to self-driving trucks.
Click here for the 5 stocks I like the most.
Ian Wyatt