Meta Platforms’ admission of increasing AI spending and a protracted path to profitability has sparked investor concerns, casting doubt on the financial viability of AI investments within the Big Tech industry. Alphabet and Microsoft, both due to report earnings on Thursday, have also indicated rising AI costs. Analysts and investors are now focusing on revenue potential, pricing models, and practical applications to justify AI expenses.
As interest in generative artificial intelligence (AI) continues to surge, many companies are aligning their businesses with this rapidly evolving field. Three stocks that stand out as potential beneficiaries include Alphabet (GOOG, GOOGL), Meta Platforms (META), and Shopify (SHOP). Each of these companies has unique catalysts and could potentially surpass the average market growth rate over the next decade. Alphabet boasts a robust and diversified portfolio with innovative AI products, Meta Platforms is leveraging its AI capabilities to enhance its social media platforms, and Shopify is partnering with leading brands to optimize their e-commerce operations using AI-driven tools.
**Alphabet (GOOGL)**, the parent company of Google, has a strong financial foundation and a diverse portfolio of businesses that are positioned for growth in the future. Google Cloud, YouTube, and AI are key areas to watch as the company continues to evolve. Despite some risks, GOOGL is a solid investment for long-term investors.
Alphabet (GOOGL) is expected to report strong first-quarter earnings and analysts speculate that the company could announce its first-ever dividend. The move would follow Meta Platforms’ recent dividend announcement and would be a major development for the Google parent. Alphabet has traditionally relied on stock buybacks to return capital to shareholders, but a dividend would provide investors with a more regular income stream. Analysts at Truist expect solid first-quarter results and have raised their price target on the stock to $170 from $158.
The S&P 500 rallied on Monday, regaining momentum from its biggest weekly loss since March 2023. Investors anticipate upcoming earnings reports from major tech firms like Tesla, Facebook-owner Meta Platforms, Microsoft, and Google-owner Alphabet. Tesla shares decreased, despite the EV manufacturer announcing fresh price reductions in China and Germany, after similar decreases in the United States. Verizon Communications fell despite reporting better-than-expected performance in the first quarter, clouded by weaker cash flow. Zions Bancorporation’s stock rose after exceeding quarterly estimates, driven by reduced credit provisions. The 2-Year Treasury yield momentarily reached 5%, influenced by expectations for upcoming economic data and the Fed’s PCE price index. Salesforce withdrew from acquisition talks with Informatica, while Matterport’s stock soared due to a takeover offer from CoStar Group. Cryptocurrency-related stocks witnessed gains as Bitcoin surged following its halving event.
The proposed ban or forced sale of TikTok in the U.S. could pave the way for Meta Platforms and Alphabet to emerge as the major beneficiaries of TikTok’s user base. According to Wedbush analysts, TikTok’s users are likely to migrate to Meta’s Facebook or Instagram, while YouTube is also expected to gain a significant number of users. This shift could significantly boost the revenue of Meta and Google.
Stock markets are showing some positivity with futures rising on Monday as investors prepare for a heavy week of earnings reports from tech giants like Tesla, Microsoft, Alphabet, and Meta. However, the market is still facing uncertainty due to geopolitical tensions and a sell-off in the tech sector after Netflix’s disappointing earnings.
