AI spending divides markets as S&P 500 EPS rise 29%
This earnings season, AI spending is a hot topic, and investors aren't all on the same page.
While S&P 500 companies are set for a big 29% surge in second-quarter earnings per share, tech giants are getting very different reactions from the market.
Microsoft's careful approach to AI investments paid off, with its stock climbing 16% thanks to strong cloud growth and keeping costs in check, while Amazon's stock climbed 15% after upbeat cloud-computing revenue, easing concerns about the payoff from its huge expenditure on AI.
Meta, on the other hand, saw its shares drop 8% after higher AI-related expenses and a weak revenue forecast.
European stocks outperform US rivals
Interestingly, European stocks have outperformed their US rivals lately.
The Stoxx 600 index rose as profits climbed by 19%, helped by more diverse sectors and less dependence on big tech.
Even companies behind the scenes in the AI supply chain, like ASML Holding and Taiwan Semiconductor, saw solid gains in a recent rally.