An analyst has claimed 'the fate of the world will be decided this Wednesday' as several tech giants prepare to drop their Q1 earnings.
Over the past year, the world's biggest technology companies have collectively poured trillions of dollars into AI infrastructure. The huge investments have triggered questions about whether it can ever be justified by returns, and whether the race to dominate AI is creating a bubble that will eventually burst.
This week, we may get some answers.
Amazon, Meta, Google, and Microsoft are all set to release their first-quarter earnings on the same day, tomorrow (29 April).
Advert
"The fate of the world is decided on Wednesday," X user and analyst Mindset for Money posted.
Understandably, the reactions online showed just how much weight is being placed on the upcoming results.
"Four companies that between them know what you bought, who you texted, what you searched," one user replied. "All reporting on the same day. Wednesday is going to be something."
Another added: "I believe layoffs would definitely help these companies to cover up some expenses of AI. But yeah let's see".
A third user wrote: "True. Underrated stuff."
StockStory reported that Google's parent company Alphabet is expected to grow 18.6% in revenue year on year, improving from its 12% increase last year.
For some, the focus will be on how effectively they are monetising the AI boom and transforming it into revenue growth.
And for others, the concern is around whether AI is beginning to erode their existing business models and customer base.
“I don’t expect an AI-related disruption in fundamentals for software companies in the first-quarter earnings cycle,” said Morningstar senior analyst Dan Romanoff. “Generally, I’m expecting modest upside on the top and bottom lines for the companies I cover.”
According to Morningstar's Romanoff, large software companies will likely stay grounded.
“We would first see some signs of deterioration, which has not occurred. Bigger picture, I think uncertainty around what the long-term looks like is high right now. Investor fears around software are high. But I am less fearful than the market seems to be,” he explained.
However, further down the line, AI's pace is fast enough that even experienced analysts are reluctant to make conclusive long-term predictions.
“The question of AI’s impact on software is inherently a long-term unknowable,” Romanoff added. “Right now, the fear is that software as we know it will disappear. But for now, software stock fundamentals are fine.”