In This Article:
Big Tech earnings are overall off to a positive start, with strong ad spending and sustained capital expenditure (CapEx) signaling continued momentum in artificial intelligence (AI) investment.
Lisa Schreiber, investment analyst at Gradient Investments, breaks down why the latest earnings results from the "Magnificent Seven" give her confidence in future growth.
To watch more expert insights and analysis on the latest market action, check out more Morning Brief here.
Talk to me about your note here. You talked about Big Tech earnings defying fears of the worst case scenario. Is that enough to give you confidence that these companies can maintain earnings growth moving forward?
Yes, absolutely. I mean, it was a, it was a big week last week with, um, most of the MAG 7 names reporting and I think overall, uh, the AI story remains intact, which is really important for the market, especially in case of uncertainty. Um, we hear, um, when we look at CapEx spending, um, it's high. Some companies even, uh, uh, even raised that, uh, that bar even higher, uh, which gives us, um, a lot of, of confidence here that the MAG 7, uh, can, can, uh, further drive the market here. And what we also, uh, looked, um, at in, especially with the MAG 7 names, with some of them is, um, ad spending. How is ad spending, uh, developing here, right? Because that could be, uh, the first, uh, point where businesses are struggling, that they're pulling back ads, which we didn't see at all. When we look at meta ad spending coming in above expectations, defying all odds, which is a good sign going forward, and especially a good sign for the tech and for the, um, MAG 7 earnings.
So, Lisa, what is your biggest concern for the big tech names going forward for the year?
Um, obviously it was a decelerating in, uh, the AI spend, right? We heard a little bit earlier in the year, um, uh, we heard something from China, deep seek, right? Um, where the market, um, reacted very negatively to that. I think that is behind us, uh, because when, uh, the general, um, new development of AI and what drives us forward is happening here with the MAG 7 tech names, right? And if you build something, if you build, uh, the future of AI and innovation on the green space, you need a lot of money for that. And that is continuing, uh, to drive the markets here. So I would be not so concerned about that. And we heard with the, uh, last earning season, CapEx spending remains intact. The overall demand remains intact, which is very positive here.
