It was a big day for Big Tech on Wednesday, with Alphabet, Microsoft, Amazon and Meta – collectively worth some $12 trillion (€10.2 trillion) – all reporting earnings.
The simultaneous release of results from four of the world’s largest companies was a lot for investors to absorb, but it was the differing reactions to Google parent Alphabet and Facebook parent Meta that stood out.
Both beat expectations on revenue and profit. Both signalled yet another increase in already vast spending on artificial intelligence (up to $145 billion for Meta, $190 billion for Alphabet). However, Alphabet’s shares rose sharply, while Meta’s lost almost a tenth of their value.
The divergence might frustrate a Meta investor. Operating income at both groups grew at roughly the same pace. Advertising – still the core business for each – remains strong. Meta, in particular, reported accelerating momentum.
READ MORE
Still, the difference lies in how that spending is perceived. Alphabet can point to tangible areas where AI is already feeding through – cloud growth, improvements in search, and even the prospect of selling its own chips more widely. As a result, Alphabet – now the world’s second most valuable listed company, worth more than $4.5 trillion after an astonishing 135 per cent share price rally over the past year – extended its gains.
Meta’s case is less concrete. Its gains are still primarily driven by advertising, with the benefits of heavy AI investment framed more in terms of future potential.
Inflation remains steady; and Conor Pope’s energy saving tips
Mark Zuckerberg’s vagueness surely didn’t help in this regard. Asked how Meta’s AI spending would translate into results, he said the company doesn’t have a “very precise plan for exactly how each product is going to scale or anything like that”, but he was “quite comfortable that the lab we’re building is on track to be a leading lab in the world”.
Investors, however, will recall Zuckerberg’s previous large-scale bet on the so-called metaverse that was also described in expansive terms, and which did not scale quite as intended.
Investors appear willing to continue to fund the AI story, but not indiscriminately. Some are clearly being given more room for uncertainty than others.
