In the ongoing antitrust trial against Alphabet’s Google, the US government will continue to present its case on Friday, focusing on allegations that the search engine giant abused its market dominance and engaged in illegal practices to maintain its position in search advertising. The government claims that Google’s business contracts harmed competition and that it manipulated ad auctions to increase prices without fear of harming its business.
Amid a market dominated by tech giants, Barclays has identified stocks with similar characteristics to Big Tech but offer diversification opportunities. Despite the recent downturn in the S&P 500, select Big Tech companies like Alphabet and Apple have remained resilient. However, Barclays suggests investors diversify their portfolios to beat market benchmarks.
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.
The UK’s Competition and Markets Authority (CMA) has invited third parties to comment on the potential competition concerns raised by partnerships and investments between Big Tech firms and smaller AI companies. These include Microsoft’s partnerships with Mistral AI and OpenAI, as well as Amazon’s partnership with Anthropic. The CMA is also looking into Microsoft’s hiring of former Inflection AI employees and its plans to license AI software. The CMA’s announcement follows a report that identified over 90 partnerships and investments in the AI sector that could potentially impact competition.
Meta Platforms (NASDAQ: META), the parent company of Facebook, Instagram, and WhatsApp, will report its first-quarter earnings after the market closes today. Analysts expect the social media giant to deliver strong results, with revenue projected to reach $36.223 billion, a 26.5% year-over-year increase, and earnings per share to jump from $2.20 to $4.36. However, uncertainties remain around the company’s Metaverse project and the upcoming US Presidential election.
The CMA is investigating Microsoft’s investments in OpenAI and Mistral AI, Amazon’s stake in Anthropic, and the hiring of Inflection AI’s team by Microsoft. The inquiry will assess whether these partnerships constitute mergers and potentially harm competition in the UK’s AI industry.
U.S. equities rebounded this week after last week’s sell-offs, with the S&P 500 index climbing 2.1% and the Nasdaq rising by 2.6%. Investors are now turning their attention to the upcoming Big Tech earnings report, which will provide insights into the latest trends in generative artificial intelligence (AI) monetization and capital spending. Analysts at UBS remain positive on the AI theme and the global tech sector overall, despite recent volatility. They believe that the fundamentals remain intact, with AI monetization increasing and capital spending on AI infrastructure continuing to accelerate. UBS also notes that global tech stocks are now trading at only 22.5 times their forecasted 2025 earnings, which could present an attractive entry point for investors.
Anthropic co-founder and CEO Dario Amodei joined ‘Squawk Box’ to share his insights on the state of the AI tech race and the company’s ‘frenemy’ relationship with Big Tech.
As the market rebounded on Monday, CNBC’s Jim Cramer observed positive stock performances but emphasized that Big Tech earnings reports this week will be crucial in determining the longevity of the rally. Chipmaker Nvidia experienced a significant rebound, rising 4%, following a 10% drop on Friday. However, Cramer cautioned that despite the recovery, Nvidia may not fully recover from its recent losses. Investors are closely monitoring the upcoming earnings reports from companies like Tesla, Meta Platforms, Microsoft, and Alphabet to gauge whether the tech sell-off will continue or subside.
The UK’s Financial Conduct Authority (FCA) is investigating how big tech firms’ access to vast amounts of data could benefit consumers and finance companies. If the FCA’s analysis finds that tech firms’ data could be beneficial in the financial services sector, it would aim to encourage more data sharing between tech and financial companies. The FCA is also concerned about the potential risks or harms from non-sharing of data and would collaborate with the Competition and Markets Authority (CMA) to develop proposals to enhance data sharing where feasible.
