microsoft, amazon and meta Updates

Major technology companies are significantly increasing their investments in artificial intelligence, with Microsoft, Amazon, Meta, and Google planning substantial spending hikes in 2026. Microsoft leads this charge with nearly $35 billion allocated this quarter, primarily for data centers and AI development. Amazon's AI investments are bolstering its AWS, retail, and advertising sectors, positioning it for continued growth. Meta, meanwhile, is financing its AI ambitions through a $20 billion bond sale, reflecting investor attention on its debt. Apple, in contrast, is taking a more measured approach to AI spending, investing $12.72 billion in capital expenditures for fiscal 2025 and utilizing its own chips and partner capacity for its Private Cloud Compute service. This strategy has not hindered its financial performance, as Apple announced record profits of $27.5 billion on $102.5 billion in revenue for the quarter ending September, largely driven by strong demand for its new iPhone 17 lineup. Despite lagging in the AI race, Apple's hardware sales remain robust. The broader economic impact of AI is evident in energy and chip stocks, with companies like Bloom Energy and American Electric Power seeing increased demand for infrastructure to support AI data centers. ASML, a key chip equipment supplier, continues to play a crucial role. Qualcomm is also entering the AI chip market with new data center processors aimed at efficient inference, offering alternatives to Nvidia and AMD. While AI can inform investment strategies, as seen in a contest where AI portfolios showed strong returns, experts caution about potential market volatility if many investors follow similar advice. SoundHound AI, however, reported a Q3 earnings miss, attributing lower earnings to increased R&D investments.

Key Takeaways

• Apple reported record profits of $27.5 billion on $102.5 billion in revenue for the quarter ending September, driven by strong iPhone 17 sales.
• Microsoft, Amazon, Meta, and Google are significantly increasing AI spending, with Microsoft investing nearly $35 billion this quarter.
• Apple's AI capital expenditures for fiscal 2025 are $12.72 billion, a more modest approach compared to competitors.
• Amazon's AI investments are strengthening its AWS, retail, and advertising businesses, with AWS showing 20% growth.
• Meta has sold $20 billion in bonds to finance its substantial AI investments.
• Qualcomm is entering the AI chip market with new data center processors, aiming to compete with Nvidia and AMD.
• Demand for AI infrastructure is boosting energy stocks like Bloom Energy and American Electric Power, with AEP planning $72 billion in capital expenditure.
• ASML Holding N.V. remains a dominant supplier of semiconductor equipment amidst AI-driven demand.
• SoundHound AI missed earnings expectations in Q3 due to increased R&D investments.
• AI can generate investment returns, but experts warn of potential market volatility if many investors follow the same AI-driven advice.

Apple's iPhone 17 drives record profits despite trade war and AI race

Apple announced strong financial results for the quarter ending September, with revenue reaching $102.5 billion, driven by high demand for the new iPhone 17 lineup. Despite global trade tensions and competition in artificial intelligence, the company nearly doubled its profit from the previous year, earning $27.5 billion. While the iPhone 17 lacks advanced AI features found in rival devices, its redesign and pricing strategy resonated with consumers. Apple's CEO Tim Cook expects continued sales growth through the holiday season, projecting at least a 10% increase for iPhones.

Apple exceeds expectations with strong quarter despite slowing iPhone sales

Apple reported financial results for its summer quarter that surpassed analyst expectations, even as iPhone sales growth slowed. The company earned $27.5 billion on revenue of $102.5 billion, an 8% increase from the previous year. Strong demand for premium iPhone models, particularly the iPhone 17, contributed to these results. Despite facing trade war tariffs and lagging in the AI race compared to competitors, Apple's stock saw a significant surge after the announcement.

Big Tech ramps up AI spending, planning even bigger investments in 2026

Major technology companies like Microsoft, Amazon, Meta, and Google significantly increased their spending on artificial intelligence this quarter, with plans to invest even more in 2026. Microsoft led the spending with nearly $35 billion, followed closely by Amazon. These investments are largely directed towards data centers, GPUs, and CPUs to support AI development and cloud services. While some investors worry about an AI bubble, companies like Google are already showing returns, while others like Meta face pressure to prove their spending is worthwhile.

Apple's modest AI spending doesn't hurt sales

Apple is taking a less aggressive approach to AI spending compared to other major tech companies, investing $12.72 billion in capital expenditures in fiscal 2025. Instead of buying numerous AI chips, Apple utilizes computing capacity from partners and its own chips for its Private Cloud Compute service. This strategy has not negatively impacted its hardware sales, with CEO Tim Cook reporting exceptional consumer response to the iPhone 17 models. Apple anticipates further increases in capital expenditures for its AI initiatives.

Amazon's AI investments position it as a strong stock buy

Amazon is rated a Strong Buy due to its substantial investments in artificial intelligence, which strengthen its position across AWS, retail, and advertising. The company's AWS division is showing 20% growth, indicating a new phase of AI-driven revenue. Despite short-term earnings being affected by one-time costs, Amazon's core retail margins and overall operating income remain robust. Analysts view Amazon's AI capital expenditures as a strategic move to maintain technological leadership and expect a recovery in free cash flow.

SoundHound AI stock drops after Q3 earnings miss

SoundHound AI (NASDAQ:SOUN) shares fell 7.1% after the company announced its third-quarter earnings report. While revenue exceeded analyst expectations at $19.1 million, the company missed on earnings per share, reporting a loss of $0.10. SoundHound AI also issued fourth-quarter guidance below analyst projections, expecting revenue between $19 million and $21 million. The company attributed the lower earnings to increased investments in research and development. Despite the stock decline, SoundHound AI remains a key player in conversational AI with potential for future growth.

AI drives investment in energy and chip stocks

Federal Reserve Chair Jerome Powell stated that the current artificial intelligence boom is different from the dotcom bubble because companies involved have actual earnings and business models. This AI investment is fueling economic growth, making stocks like Bloom Energy Corporation (BE) and ASML Holding N.V. (ASML) notable. Bloom Energy is seeing increased demand for its fuel cell technology from AI data centers, securing significant projects. ASML, a key supplier of semiconductor equipment, faces potential challenges from new manufacturing methods but maintains its dominant position.

American Electric Power stock rises on AI infrastructure demand

American Electric Power (AEP) stock increased by approximately 5% following mixed earnings, driven by investor confidence in its role in supporting artificial intelligence infrastructure. The company reported revenue of $6.01 billion, exceeding estimates, though earnings per share were slightly below expectations. AEP plans a $72 billion capital expenditure to support a projected 7% to 9% annual growth rate over the next five years, anticipating significant demand from data centers. Despite potential increases in residential electricity prices, AEP aims to limit rate hikes to 3% to 5% annually.

AI stock picks yield mixed results in investor contest

A startup founder named Harpaul Sambhi pitted his wealth manager against ChatGPT to see which could generate better investment returns. Sambhi's ChatGPT portfolio returned 35% over the past year, while his wealth manager achieved 40%, outperforming the S&P 500's 15% gain. Another investor, Daniel Padilla, saw his AI-generated portfolios gain 49% and 52% respectively. While AI can offer investment ideas, experts caution that it may lack a unique information edge and carries risks, as many investors may follow the same advice, potentially leading to market volatility.

Qualcomm enters AI chip market with new data center processors

Qualcomm is expanding into the artificial intelligence chip market with its new AI200 and AI250 data center chips, set for release in 2026 and 2027. These chips focus on efficient AI inference and offer enhanced memory capacity, aiming to provide cost-effective alternatives to Nvidia and AMD's GPUs. Qualcomm's move diversifies its business beyond smartphones and includes a significant deal with Saudi Arabia for AI infrastructure. While facing challenges from established players like Nvidia, Qualcomm's focus on power efficiency and potential cost savings could attract cloud providers.

Meta's debt trading begins after $20 billion bond sale

Credit derivatives linked to Meta's debt began trading after the social media company sold $20 billion in bonds. The cost to protect Meta's debt against default for five years was approximately 0.45 percentage point annually. This trading activity reflects investor concerns about the significant debt financing required for the massive investments in artificial intelligence. Credit derivatives are often an early indicator of investor sentiment regarding a company's financial risk.

Sources

• Apple delivers strong results despite global trade war and AI rivalry
• Apple delivers strong quarter despite iPhone sales slowdown
• See Big Tech's massive AI spending spike — and their plans to go bigger next year
• Apple's AI spending trails far behind other megacaps. It's not hurting sales
• Amazon: The Most Misunderstood AI Stock On Wall Street (AMZN)
• SoundHound AI (NASDAQ:SOUN) Trading Down 7.1%
• 10 AI Stocks in the Spotlight This Week
• Investors Boost American Electric Power on AI Growth
• AI told them which stocks to buy. The results are wild
• Is Qualcomm the New AI Chip Growth Stock to Buy?
• Credit Derivatives on Meta Start Trading After Big Bond Sales