To The Moon

Meta's plan to invest more heavily in artificial intelligence infrastructure caused $Meta Platforms, Inc.(META)$ stock to sink Thursday, but the tech giant's capex news lifted AI stocks, particularly shares of tech hardware companies, including $NVIDIA Corp(NVDA)$ .

With $Alphabet(GOOGL)$ earnings Alphabet beats revenue estimates as AI fuels cloud growth, the cloud services revenue rose 28% to $900 million in quarter. Alphabet announced 20-cent dividend and $70 billion share buyback.

AI Monetization Is Next To Look At

In the earnings call for comments on AI, there have been pattern of big tech earnings over the next two weeks as companies prioritize technology over financial reporting. It was the case when Meta reported Wednesday (24 April). And it was the case for Alphabet when it reported its Q1 earnings on Thursday (25 April).

Meta Spending On AI

Meta now sees 2024 capital spending of between $35 billion and $40 billion, above its previous forecast of $30 billion to $37 billion, on higher AI-related outlays.

This aggressive AI spending plans does not resonate well with investors as there are quite a high level of selling and Meta stock plunges. Moreover, META plans to further boost capex next year to support its ambitious AI research and product development initiatives. Zuckerberg cautioned that these investments might take years to yield significant returns. Nonetheless, unlike its metaverse ventures, META's AI investments have already positively impacted its financials, enhancing app engagement and advertising metrics. Challenges remain, as META's aggressive investment strategy and a slightly cautious Q2 revenue outlook have affected its stock performance and influenced the market,

Can AI Help Google Search Makes More Money?

Alphabet CEO said the company has clear paths to monetize AI breakthroughs through advertising, cloud, and subscriptions. He has also keep mentioned that the integration of AI tools into Google search, which allows users to ask more complex and descriptive questions.

But looking at the high percentage of revenue that Google Search and other carries, more than 55%, I think what would be interesting to see how AI will influence Google’s search business still remains unclear.

We might be seeing new AI-based interfaces displacing traditional search and change the way users interact with the Web. Will it sit well in users’ experience and expectations?

Alphabet Performance (Short-Term)

If we looked at the MACD and KDJ for Alphabet, we can see that it is actually pointing to an expected downtrend, but the earnings really surprise the market.

But what would be important is whether Google would be able to keep up this level of earnings as they integrate the AI into their search, based on the technical analysis, we might see the KDJ build up today, and we might expect a MACD crossover.

But what would be a good entry price, I would think that we could be looking at around $160.00, there might be a small pullback, before we see another gap up.

Meta Platform Performance (Short-Term)

As for Meta, we could see that there is a falling wedge formed, but the demand (buying) is not there, and this sell off could continue again as the capex spending on AI is still not justified, investors is still not confident on how AI would help to boost Ads earnings for Meta.

I think it is still reasonable to continue to short Meta, unless we could see some effect of Google, benefitting Meta today (26 April).

Summary

If we looked at the big tech earnings, AI is still the buzzword, but we have seem to shift from the hype to reality, investors are looking at AI monetization, and not spending, especially with a volatile economic condition.

So prudent spending and how AI could bring monetization hopefully to profitable would be key. It would be interesting to see more earnings coming up, which stocks could really show the true monetization from AI, shall win the game.

Appreciate if you could share your thoughts in the comment section whether you think AI monetization is an important phase now as AI matures?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.