Alphabet kicks off Big Tech earnings: Key themes to watch
Alphabet (GOOG, GOOGL) will report quarterly results after the bell, kicking off Big Tech earnings with Microsoft (MSFT), Amazon (AMZN), Meta Platforms (META), and Apple (AAPL) coming later this week. Barclays head of US equity strategy Venu Krishna sits down with Seana Smith and Brad Smith on Morning Brief to discuss the setup going into Big Tech earnings as investors watch for signs of when artificial intelligence (AI) spending will pay off. “A lot rides on [Big Tech earnings], Krishna tells Yahoo Finance, saying, “If you think about Big Tech, which is a collection of six stocks, that's been the fulcrum for this market and holding it not just from earnings, from returns perspective as well.” The strategist says this earnings season is especially important for Big Tech players as “their earnings as a group is moderating from extremely high levels. So their comps are getting difficult… The earnings are moderating, but still are expected to settle in the 20s, which is extremely healthy.” The results come as the companies have invested billions into building AI infrastructure without a clear timeline for monetization. Krishna says the “biggest uncertainty, or at least caution, I have is what do you pay for those earnings when they're moderating and when they've entered a phase in which a significant amount of uncertainty around the timing of monetization of AI spend?” He notes “The historical experience in the last ten years when this Big Tech group has had a situation of high capital intensity in terms of spending and moderating earnings growth. Multiples have corrected reasonably strongly in those periods. That's the setup we have right now.” Krishna says, “We are quite optimistic, but I think a lot rides on Big Tech to at least create that base of stability, even as they are moderating so much of those profits.” He adds that companies like Alphabet “have tremendous horsepower in terms of their capability and the ability to execute on AI. Don't forget, when you talk about Google, they were at the forefront of the whole AI phenomenon well over a decade ago.” To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. This post was written by Naomi Buchanan.
