Big tech's Q2 earnings, reported over the past two weeks, indicate that stock market investors are scrutinising the AI sector. Concerns include high capital expenditure expenses, reduced free cash flow, and uncertainties surrounding chip availability.
The market has seen considerable volatility, with major tech stocks experiencing significant fluctuations. Apple's stock declined by 10% after the company indicated its next quarter might not meet expectations due to elevated memory and other component prices. IBM also saw a substantial single-day value loss after its latest earnings warning.
Meta's free cash flow decreased significantly, attributed to capital spending on new data centres for AI development. Conversely, Amazon's stock rose by 15% despite increased capital expenditure estimates, partly due to better-than-expected growth in Amazon Web Services (AWS) and investor perception of its AI investments.