Meta’s AI Promise, Microsoft’s Disappointing Beat & Why Google Should Spin Youtube | Prof G Markets

AI Spending

Tech giants like Microsoft, Meta, and Alphabet are investing heavily in AI, with their combined CapEx expected to exceed $150 billion in 2024. This massive spending is not just about technological advancement but also about maintaining competitive edge, as Ed Elson suggests that these companies may be engaging in a "big dick contest" to avoid being seen as laggards 1. Scott Galloway compares this to the COVID stimulus, where the risk of underinvestment is perceived as greater than overspending.

If they overdo it, they spend too much. That's not the same risk as being the company...that got bested and saw their stock lag everyone else's because they underinvested.

--- Scott Galloway

This competitive spending spree is crucial for Nvidia, which relies on these tech giants for 40% of its sales 1.

   

Earnings Pressure

Recent earnings reports from major tech firms reveal mixed reactions from Wall Street. While Google impressed with a 15% revenue growth and a 4% stock rise, Microsoft and Meta faced criticism despite strong earnings 2. Ed Elson notes that Microsoft's softer guidance and Meta's slightly weaker user growth led to stock declines of 4% and 3%, respectively.

The expectations are now that you're going to blow away expectations.

--- Scott Galloway

This highlights the immense pressure on these companies to not just meet but exceed market expectations, a sentiment echoed by Scott Galloway 2.