Big Tech earnings season kicks off with intense scrutiny on AI capital expenditure
Wall Street analysts are preparing to dissect artificial intelligence spending, semiconductor demand, and margin pressures across the technology sector as major firms release quarterly results.
The latest cycle of big technology earnings begins next week, with Google and Intel scheduled to report their financial results on 22 and 23 July respectively. Investors will direct their attention primarily to artificial intelligence capital expenditure, the returns generated from these investments, and broader semiconductor sales trends. This focus comes as the market seeks clarity on the financial viability of the massive infrastructure build-out underway across the sector.
Microsoft and Meta have recently faced significant market pressure due to their substantial investments in AI data centre capacity. In contrast, Google and Amazon have largely avoided similar valuation penalties in recent months. For these two firms, the expectation is to maintain strong performance while demonstrating disciplined control over spending levels. Analysts will be closely monitoring remaining performance obligations, a metric reflecting signed contracts where revenue has not yet been recognised, as a key indicator of future growth trajectories for these hyperscalers.
On Wall Street, specific attention will turn to Microsoft’s expansion of its Copilot service and the growth of AI capabilities within its Azure platform. For Meta, the focus will be on how the company is leveraging AI to enhance advertising sales and user engagement metrics. These developments are critical as investors assess whether the heavy upfront costs in AI infrastructure are translating into tangible commercial advantages.
The semiconductor sector will also face intense scrutiny, with chipmakers including Nvidia, Intel, and AMD, along with memory manufacturers, required to demonstrate that demand is either maintaining pace or accelerating. This requirement is particularly pressing given recent market behaviour, where investors have engaged in "sell the news" activity following Nvidia’s strong earnings results, suggesting a degree of caution or fatigue despite positive financial outcomes.
Apple’s upcoming results will be analysed for iPhone sales trends, customer purchasing motivations, and the impact of rising memory and storage costs on profit margins. Commentary regarding consumer behaviour will be vital, as analysts seek to determine if customers are purchasing devices to avoid potential future price hikes or holding out for the company’s rumored foldable iPhone, which is expected to launch in the autumn.
