AI Spending: Big Tech Earnings Reveal Widening Divide in Returns

Big Tech earnings revealed a widening divide in the artificial intelligence (AI) race, with investors now focusing on whether massive AI investments are yielding measurable returns.

Apple's stock fell 7% after the company issued a softer sales outlook, citing rising memory chip costs. CEO Tim Cook described the surge in DRAM prices as a '100-year flood on memory pricing', putting pressure on Apple's margins.

On the other hand, Amazon and Microsoft reported strong results driven by growing demand for cloud computing and AI services. Amazon Web Services (AWS) revenue jumped 37% to $42.2 billion, while Azure growth increased 43%. Both companies raised their capital spending forecasts as they invest in new data centers and AI capacity.

META's stock declined over 6% after investors questioned its AI spending plans and slower-than-expected outlook. CEO Mark Zuckerberg said Meta is exploring ways to monetize its massive AI infrastructure investments by potentially selling computing capacity to outside customers.