Alphabet, Microsoft and Amazon will report earnings over the next two weeks as investors demand proof that record AI investment is driving meaningful revenue growth.
The three companies have led the AI investment boom, committing billions of dollars to data centres, chips and software infrastructure.
Suppliers such as Nvidia and ASML have outperformed many of the companies funding the AI buildout, raising fresh questions about who is actually benefiting commercially.
Analysts at StoneX identified a clear shift in market sentiment heading into this earnings season, warning that patience among investors is thinning considerably.
“The largest change this quarter is the market’s declining willingness to reward AI spending simply because it is large,” the StoneX analysts said.
Investors are now looking for evidence that AI investment is generating revenue quickly enough to justify another wave of capital spending, the analysts added.
Google reports first on Wednesday, followed by Microsoft and Meta the following week, before Amazon and Apple round off the busiest week of the reporting season.
Google enters earnings in the strongest position after shares climbed almost 19 per cent this year, giving the company considerable momentum heading into results.
I/O Fund analysts said Google had shown the clearest signs that AI investment was feeding through into its core business, pointing to Google Cloud’s accelerating growth and stronger demand for AI-powered search and advertising products.
“Cloud and Search are Google’s two key AI growth levers,” the I/O Fund analysts said, adding that continued cloud acceleration and wider adoption of AI-enabled ad campaigns would be “critical” to proving its AI monetisation “is here to stay.”
Microsoft faces a tougher set of questions despite reporting that its AI business has grown to more than $37bn in annual recurring revenue, with Azure cloud growth remaining broadly unchanged over the past year.
Azure has lagged rivals including Google Cloud and Amazon Web Services, making any acceleration in its growth rate one of the most closely watched figures this reporting season.
StoneX identified accelerating Azure growth as among the most important numbers to watch, while I/O Fund said Microsoft’s results would need to show heavy investment translating into stronger cloud demand rather than simply higher costs.
Amazon heads into earnings after AWS posted its fastest growth in almost four years, giving the company a strong platform ahead of its results.
I/O Fund described AWS as the retailer’s “main AI growth driver,” pointing to continued acceleration in cloud demand alongside rapid growth in its AI chip business.
Several strategists said forward guidance could prove more important than headline earnings figures, as markets seek clarity on the sustainability of spending plans.
Goldman Sachs expects another strong reporting season for US technology companies, forecasting that AI-related businesses will account for the majority of earnings growth across the S&P 500.
However, Goldman said investors were now asking a different question than a year ago, focusing on whether heavy spending is becoming “a sustainable earnings driver” rather than simply a statement of ambition.
Tyler Mordy, chief executive and chief investment officer at Forstrong Global, said investors were increasingly assessing whether Big Tech’s capital spending would “translate into stronger AI-related revenue and earnings,” even as the broader investment cycle remained intact.
The coming fortnight of results will mark one of the most consequential earnings periods yet for an industry that has staked its near-term future on the promise of artificial intelligence.