Instead, four leading tech companies reported quarterly results that beat Wall Street\u2019s official forecasts but nevertheless fell short of the sky-high expectations investors have set for companies leading the AI revolution. <\/p>\n
<\/div>\n
Investors were most enthusiastic about the results of Google parent Alphabet, whose shares climbed as much as 6% in after-hours trading. The company reported earnings and revenue that beat analysts\u2019 expectations and raised its estimate of how much it would spend on AI infrastructure. <\/p>\n
Earnings for Facebook parent Meta were greeted with less fervor. Its shares fell more than 5% after it said it expected revenue growth to stay flat in the second quarter. <\/p>\n
Amazon\u2019s and Microsoft\u2019s results and forecasts were more mixed. Investors ultimately sent both lower by about 3%. <\/p>\n
The major U.S. stock indexes are sitting near all-time highs despite war with Iran, rising oil prices and dismal consumer sentiment readings. <\/p>\n
But overall business investment and consumer spending levels remain resilient \u2014 and companies on the S&P 500, the index considered the best proxy for overall stock market performance, are reporting the highest average net profit margins in more than 15 years, according to the analytics group FactSet. <\/p>\n
That performance is being led by tech companies known as \u201cThe Magnificent 7\u201d \u2014 Apple, Microsoft, Alphabet, Amazon, Meta, Nvidia and Tesla, which dictate about one-third of the S&P 500\u2019s average performance. <\/p>\n
Tech\u2019s leadership has created a double-edged sword for the market writ large: When times are good in tech, the market tends to rise. When tech\u2019s performance is rockier, the market can sink. <\/p>\n
\u201cStocks are again trading at record highs, reflecting strong investor confidence, but the S&P 500\u2019s heavy concentration in the Mag 7 technology leaders elevates downside risk should earnings fall short, as valuations leave little margin for error,\u201d Chris Brigati, chief investment officer at SWBC, a Texas-based financial group with more than $1 billion in assets under management, said in a note to clients this week. <\/p>\n
Investors remain focused on the companies\u2019 projections for future spending levels on the technology and infrastructure underlying their AI programs \u2014 and how they square with revenue, Brigati said.<\/p>\n
\u201cEach company faces its own dynamics, but delivering tangible results from elevated [capital expenditures] remains the critical test,\u201d he said.<\/p>\n
Until the end of March, Mag 7 companies\u2019 performance had been caught in the downdraft that hit the broader market as the war with Iran took hold. Many had already spent much of the second half of 2025 treading water as concerns about the timeline for earnings from AI investments, plus seemingly circular financing arrangements, took hold. <\/p>\n
But sometime in early April, investors began to realize that the most important names had been trading at discounts relative to projected earnings, according to Ed Yardeni, an economist and president of Yardeni Research, a widely respected market consultancy. <\/p>\n
\u201cI think the perception that there might be an exit ramp for Trump with the war with Iran and ceasefire got investors looking at markets again, and what they suddenly realized is the overall market, and specifically the Mag 7, were a lot cheaper,\u201d Yardeni told NBC News. <\/p>\n
In recent days, the market has lost some momentum amid signals that President Donald Trump is planning for a more prolonged conflict. A Wall Street Journal report that ChatGPT maker OpenAI may be on track to miss key revenue and user targets has also slowed tech\u2019s recent momentum. OpenAI investments in \u2014 and from \u2014 other major tech companies have left it deeply intertwined in the AI boom, and some investors fear any weakness could ripple through parts of the AI ecosystem.<\/p>\n
OpenAI called the Journal report \u201cclickbait.\u201d<\/p>\n
The actual severity of any shortcomings at OpenAI and how far any weaknesses could spread remain open questions, Yardeni said. For now, cautious investor optimism remains the prevailing sentiment and will most likely continue to power markets higher.<\/p>\n
\u201cConcerns about some of the uncertainties, like if these companies are spending too much or if they\u2019ll ever get a proper rate of return, that seems to have gone by the wayside,\u201d he said.<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
Market watchers looking for clarity about the direction of Big Tech and the AI investment boom didn\u2019t get much Wednesday afternoon amid a barrage of key earning reports. Subscribe to read this story ad-free Get unlimited access to ad-free articles and exclusive content. Instead, four leading tech companies reported quarterly results that beat Wall Street\u2019s…<\/p>\n","protected":false},"author":1,"featured_media":4670,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-4669","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/tradertideinsights.com\/index.php?rest_route=\/wp\/v2\/posts\/4669","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tradertideinsights.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tradertideinsights.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tradertideinsights.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/tradertideinsights.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4669"}],"version-history":[{"count":0,"href":"https:\/\/tradertideinsights.com\/index.php?rest_route=\/wp\/v2\/posts\/4669\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tradertideinsights.com\/index.php?rest_route=\/wp\/v2\/media\/4670"}],"wp:attachment":[{"href":"https:\/\/tradertideinsights.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4669"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tradertideinsights.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4669"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tradertideinsights.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4669"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}