Key facts
- Investors are pressing for evidence that the AI boom can deliver swift returns.
- Rising bond yields and record costs to insure Meta's debt amplify concerns about AI infrastructure funding.
- Google Cloud revenue is expected to surge 95.1% to $29.57 billion in the September quarter.
- Amazon Web Services is expected to post 38.2% revenue growth.
- Microsoft Azure is expected to expand 47.7%.
- Google search revenue growth is expected to slow to 14.7%.
Wall Street anticipates stronger cloud growth from Amazon, Microsoft, and Alphabet this week, but market volatility and rising AI financing costs are dampening investor optimism. Investors are seeking evidence of swift returns from the AI boom to justify its significant price tag.
Rising bond yields at AI cloud providers such as CoreWeave and increased costs to insure Meta Platform's debt have amplified concerns about how the massive AI infrastructure buildout is being funded, especially with higher US interest rates on the horizon. Market turmoil has rekindled warnings of an AI bubble from investors, including Citadel founder Ken Griffin.
Big Tech's results this week will serve as a litmus test for AI adoption and economic viability. These three companies, with nearly $1.7 trillion in combined backlog, plan to spend as much as $600 billion this year. Meta's recent results showed how unforgiving the calculus has become, with its shares falling nearly 7% after increased spending plans overshadowed better-than-expected revenue growth.