Big tech companies are experiencing a surprising trend: Simply beating Wall Street forecasts isn’t enough to satisfy investors. This led to a decline in stock prices, despite mostly positive earnings reports.
What happened Big tech companies have observed a paradox: Simply beating Wall Street forecasts isn’t enough to satisfy investors.
THURSDAY, Microsoft (NASDAQ:MSFT) reported quarterly revenue that beat expectations by $1 billion, and an 11% increase in net income from the previous year.
Despite these impressive figures, Microsoft shares fell 6.1% due to conservative forecasts for the coming quarter, marking its worst performance since October 26, 2022, reported CNBC Friday.
Apple (NASDAQ:AAPL) faced similar investor backlash. Despite earnings beating Wall Street estimates, the stock began to decline during Friday’s premarket amid investor concerns about weak guidance for December quarter sales.
Even Alphabet (NASDAQ:GOOGL), which initially saw a nearly 3% rise in its shares after reporting earnings on Wednesday, saw a drop of 1.9% on Thursday after OpenAI announced the launch of Chat GPT Search, a competitor to Google Search.
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Ross Mayfield, investment strategist at Baird Private Wealth Management, commented on the situation, saying: “I think we are getting to the point where the enthusiasm and potential of AI is not enough. These companies aren’t quite delivering the growth that has been priced into their stock.”
Why it matters : This comment comes at a time when companies like Microsoft, Apple and Meta are betting everything on the AI buzz. Microsoft’s AI business is on track to surpass $10 billion in annual revenue, which would be a significant milestone.
The CEO Satya Nadella highlighted the rapid adoption of AI across Microsoft’s product portfolio, highlighting strong demand from its customers.
Jim Cramer noted that by increasing its investments in AI infrastructure next year, Alphabet could benefit significantly of NVIDIA Corp (NASDAQ:NVDA). Alphabet’s latest earnings report revealed a 15% increase in revenue, highlighting its strategic focus on technological advancements.
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Disclaimer : This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
Images via Shutterstock, edited via Canva
