US tech giants saw their shares fluctuate this week as investors tried to gauge whether artificial intelligence will fill coffers or drain them.
While it is important to stay on the cutting edge by investing in AI, the market wants financial engines of tech firms going strong to pay for it, according to analysts.
Apple and Amazon on Thursday were the latest titans to see quarterly earnings scrutinized over how their core businesses are doing and whether cloud and AI strategies are paying off.
Amazon said its profit in the recently ended quarter doubled with the help of renewed momentum of its AWS cloud computing business.
Revenue at the AWS cloud computing unit grew, but the e-commerce giant’s sales of $148 billion fell just shy of lofty market expectations, and shares dove in after-market trades.
Money taken in by Amazon ads was also shy of expectations. Retail, ads and cloud computing are considered Amazon’s financial pillars.
“While Amazon has multiple levers it can pull, the outlook is becoming tighter,” said GlobalData Retail managing director Neil Saunders. “Amazon will remain very profitable but the pace at which it can add to the bottom line appears to be waning.”
Amazon — like other tech giants investing in AI — is also spending more money, a factor investors are watching keenly.