Apple's focus on services and long-term opportunities, such as spatial computing and the potential car, provide additional avenues for growth.
Google's investments in AI position it as one of the best ways to invest in AI among the mega-cap companies.
Microsoft's strong focus on artificial intelligence and its dominance in the industry position it well for positive earnings and long-term prospects.
Deep dives
Apple's Earnings and Outlook: Positive Quarter and Continued Dominance
Despite concerns about iPhone demand and the impact of app store changes, Apple's upcoming earnings are expected to be positive. The company's installed base continues to expand, maintaining its dominance and increasing the active device base. Additionally, Apple is investing in artificial intelligence and is expected to announce its foundation model, likely named Siri, in June. While the iPhone growth rate is not exceptional, Apple's focus on services and long-term opportunities like spatial computing with Vision Pro and potentially the car provide additional avenues for growth.
Google's Alphabet and the Potential in Artificial Intelligence
Alphabet, specifically Google, is considered one of the best ways to invest in artificial intelligence (AI) among the mega-cap companies. Google's investments in AI have been ongoing since 2017, and they are making progress in developing their foundation model, codenamed Ajax. The company aims to expand their search business with AI advancements, but there are concerns about the potential impact on the growth of their core business. Additionally, with AI becoming a central focus for Google, the company is likely to provide more information on their AI strategy during earnings calls.
Microsoft's Growth and Positioning in AI
Microsoft continues to perform well and is expected to report positive earnings. The company benefits from their strong focus on artificial intelligence and how it enhances their products, such as co-pilot increasing the utility of Microsoft Office. While the expectations for AI contributions to Microsoft's revenue are relatively muted, the company's dominance and investment in AI position them well in the long term. Additionally, Microsoft's cloud business may experience positive growth with AI advancements. Overall, Microsoft's long-term prospects in AI and technology remain strong.
Google Cloud's Revenue Growth and Potential Impact on AWS
Google Cloud's revenue growth in the September quarter was 23%, showing a deceleration compared to the June quarter. On the other hand, AWS experienced a slight uptick in revenue growth from 12.2% to 12.4%. While Google Cloud is currently the third player in the cloud market, its performance has an impact on the psychology of investors due to its connection to the AI opportunity. The challenge for Google is to communicate how generative AI apps, like Gemini, can positively impact search growth and overcome potential cannibalization concerns. Overall, Google Cloud's growth is expected to align with the September quarter, but any significant variation may impact stock performance.
Meta's Market Cap and Growth Prospects
Meta, formerly known as Facebook, is approaching a $1 trillion market cap. After a significant sell-off following a name change and disappointing performance, the stock has rebounded over 300%. Meta's execution in applying gen AI across its platforms, particularly in digital advertising, has been well-received by investors. However, there are concerns about the negative impact of certain products, such as Instagram, on society. The company needs to address these concerns and provide better explanations about the impact of generative AI on search growth. While Meta's current valuation appears attractive compared to its peers, there are mixed sentiments about the long-term prospects of the stock and its CEO, Elon Musk, remains a wildcard.
Gene Munster of Deepwater Asset Management is back for his quarterly tech earnings preview! He joins Dan Nathan to discuss Nvidia (5:00), Microsoft (11:00), how interest rates impact tech stocks (19:15), Alphabet (20:30), Amazon (27:00), Meta (32:45), Apple (38:30), Tesla (48:15), and Gene’s AI bubble prediction (57:45).
