Alphabet Inc Class CPenalized for heavy AI spending, which is a capital allocation concern.
Equity investors are learning that not all artificial intelligence trades are created equal this earnings season. While S&P 500 firms are on track for a 29% surge in second-quarter earnings per share, the index has been flat since mid-July as traders penalized heavy AI spenders like Meta Platforms Inc. and Alphabet Inc., while rewarding Microsoft Corp. for preserving cash reserves. European stocks have fared better, with the Stoxx 600 advancing 1.3% as its members posted a 19% profit surge, benefiting from lower tech concentration. The semiconductor supply chain also saw gains, with Lam Research Corp., Schneider Electric SE and Prysmian SpA among outperformers on robust AI-enabling demand. Profit expectations continue to rise on both sides of the Atlantic, with US earnings revisions seeing net upgrades for 15 straight weeks, the longest streak since 2022.
Alphabet Inc Class CPenalized for heavy AI spending, which is a capital allocation concern.
Meta Platforms Inc.Penalized for heavy AI spending, which is a capital allocation concern.
Microsoft CorporationRewarded for preserving cash reserves, indicating disciplined capital management.
Schneider Electric S.E.Outperformer on robust AI-enabling demand in semiconductor supply chain.
Amazon.com Inc
Lam Research CorpOutperformer on robust AI-enabling demand in semiconductor supply chain.
Taiwan Semiconductor Manufacturing Co. Ltd.
ASML Holding N.V.
Prysmian SpAOutperformer on robust AI-enabling demand in semiconductor supply chain.
Citigroup Inc.