This past week, Wall Street’s Big Tech firms all reported earnings. And the collective message was clear: AI is supercharging their businesses.
That’s because as this breakthrough technology continues its rapid ascent, companies are increasingly looking to build and deploy AI applications via public cloud networks.
And thanks to that burgeoning demand, Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOGL) all reported that AI is driving renewed growth momentum in their core cloud businesses (Azure, AWS, and Google Cloud, respectively).
These firms are sporting accelerating revenue growth, big margin expansion, huge profit growth, and excellent guidance. That’s a great quarter by any stretch of the imagination.
And that’s more than enough to power these Big Tech stocks higher in the long run.
The Scoop on Big Tech Earnings
Microsoft noted that AI’s integration into devices like laptops is also boosting its PC business to its biggest growth in years.
Amazon said that AI is driving efficiencies in its shopping and logistics businesses, leading to its best profit margins ever.
Alphabet remarked that AI is improving targeting and results in its core advertising business.
And in its Q4 call this past Thursday Feb. 1, social media titan Meta (META) said that AI is driving improved ad results. That’s allowing the company to cut costs and is enabling enough cash flow generation to launch Meta’s first-ever dividend. In responde, META stock went on to have its best day in a decade.
Across the board, AI is driving accelerating revenue growth, expanding profit margins, and robust profit growth at the world’s most important companies.
And we think this is just the start.
The Final Word
To us, Big Tech firms are the harbingers of the AI Revolution’s first wave. Since they’re the most forward-thinking firms in the world, with the most talent and the most resources, they are also the first to embrace and deploy new technologies like AI.
But they won’t be the only ones that use AI to drive improved financial results.
Other companies will start to take notice. They’ll start using and investing in AI more aggressively. And inevitably, the impressive results we saw from Big Tech this past week should also emerge for every other tech company out there.
The net takeaway?
The AI Revolution is about to expand in a significant way – by broadening out to smaller tech stocks.
Yes, Big Tech stocks have already soared to all-time highs, and then some. But that doesn’t mean that this bull run in AI stocks is over.
Big Tech has just been riding the first wave of this AI Boom. And now the second wave is about to begin.
Of course, that means it’s time to fill your portfolio with smaller tech stocks primed to win big as the AI Boom matures.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.