Big Tech Earnings Show AI Investments Face New Scrutiny

Big Tech earnings last week highlighted a widening divide in the artificial intelligence race. Companies are investing heavily in AI, but investors are now focusing on whether those investments are translating into measurable returns.

Apple shares dropped 7% after the company issued a softer sales outlook, citing rising memory chip expenses. CEO Tim Cook said the surge in DRAM costs has created a '100-year flood on memory pricing,' putting pressure on the company's margins.

On the other hand, Amazon and Microsoft posted strong results driven by rising demand for cloud computing and AI services. Amazon Web Services revenue jumped 37% to $42.2 billion, while Microsoft's Azure growth reached 43%. Both companies raised their capital spending forecasts, with Amazon investing in new data centers and AI capacity.

Meta shares fell over 6% as investors questioned its AI spending plans. CEO Mark Zuckerberg said Meta is exploring ways to monetize its massive AI infrastructure investments by potentially selling computing capacity to outside customers. Tesla stock recorded a 0.6% weekly dip, with sentiment around the stock remaining in 'bearish' territory.