Jai Hamid
Over two-thirds of the S&P 500 have released their earnings for this quarter, but heavy hitters like Palantir, Qualcomm, and Super Micro Computer are still on the list.
Among these, Palantir stands out. It’s been on fire, rising over 140% this year, with its AI software demand driving significant momentum. Investors are anxious to see if the company can keep this pace as it reports earnings Monday after the closing bell.
Qualcomm is also set to release its earnings soon, with investors watching closely to see how it positions itself in the rapidly evolving AI market.
The big reveal comes after a busy week, where major tech players like Apple, Amazon, Microsoft, and Meta released their numbers. So far, it’s been a good season overall, with 75% of S&P 500 companies beating earnings estimates, according to FactSet.
Profits are on track to grow over 5% compared to last year, a strong outcome given the economic backdrop.
Palantir on fire amid AI surge
Palantir’s performance this year has been nothing short of extraordinary. Thanks to demand for its AI software, shares have climbed over 140%. For this quarter, analysts expect Palantir’s earnings to surge more than 20% year-over-year, based on data from LSEG.
That’s a major leap, considering Palantir only beats earnings expectations 38% of the time, according to Bespoke Investment Group. Even so, the stock tends to rise 1.9% on earnings days. With this earnings report, all eyes are on whether Palantir can keep riding this AI wave, especially after it raised its annual revenue forecast last quarter, capitalizing on its AI strength.
Palantir’s earnings call is set for 5 p.m. ET Monday. Last quarter, Palantir raised expectations with a strong forecast driven by its AI capabilities, and the market responded with a rally. Now, as it’s about to reveal the latest numbers, Wall Street wants to know if this AI momentum is sustainable.
While Palantir’s software demand has been hot, history has shown that beating expectations isn’t its strong suit. With just a 38% track record for earnings beats, there’s always that uncertainty. But if they manage to pull off another impressive result, it could add to their stock’s meteoric rise this year.
AI spending spree continues for tech giants
Meanwhile, the big tech firms—Amazon, Microsoft, Meta, and Alphabet—are throwing staggering sums into AI. Amazon’s capital expenditure for 2024 could hit a record $75 billion, with CEO Andy Jassy calling AI a “once-in-a-lifetime opportunity.”
MoffettNathanson’s analysts described Amazon’s spending as “truly staggering.” It’s a bold move, but one they argue will be good for the business, customers, and shareholders over the long haul.
On Wednesday, Meta’s Mark Zuckerberg also promised to boost spending on AI language models, core to Meta’s future plans. This year alone, Meta’s capital expenditures could hit $40 billion. Alphabet didn’t hold back either, with CFO Anat Ashkenazi forecasting “substantial” spending increases in 2025.
As these companies sink billions into AI, they’re snapping up high-end chips, constructing massive data centers, and even cutting deals with energy providers to keep their infrastructure running. They’re all in, trying to capture the future.
Apple isn’t sitting out either. While its AI products haven’t landed as expected, it’s getting in the game with new services like Apple Intelligence. But this quarter’s numbers weren’t particularly impressive for Apple. The planned AI initiatives haven’t moved the needle yet.
Apple saw its stock dip in early trading after its earnings release, losing around 1.1%. The mixed results from tech firms this quarter show the high-stakes nature of these AI investments—big spending doesn’t always mean big returns right away.
Super Micro Computer faces challenges ahead
Super Micro Computer, another AI-linked player, also has a lot riding on this earnings season. The company is scheduled to release its earnings Tuesday after the bell, followed by a call at 5 p.m. ET. Super Micro announced a 10-for-1 stock split last quarter but posted weaker-than-expected earnings, disappointing the market.
LSEG analysts predict Super Micro could post over 100% growth year-over-year in earnings this quarter, but the company faces some big challenges. Last week, it lost 45% of its stock value after Ernst & Young resigned as its auditor, sending the company into a slump. Investors will be watching closely to see if Super Micro can bounce back or if it’s on a downward slide.
Now Wall Street is split on whether the AI boom can justify these massive investments. Three months ago, the market punished these tech firms for their high costs, with little immediate payoff. This quarter, though, it seems the response is to invest even more aggressively.
As executives line up behind AI, they’re sending a clear signal: they’re betting everything on this technology. From deals with energy providers to high-stakes infrastructure builds, the entire sector is throwing down for AI.
With stock prices and investor sentiment fluctuating, it’s clear the AI arms race is not for the faint-hearted. Microsoft reported mixed results, with cloud growth disappointing some investors, even as they poured $14.9 billion into property and equipment, a 50% increase from last year.
CEO Satya Nadella explained that demand for their cloud and AI services surged quickly, outpacing their data center capacity. “This demand all showed up pretty fast,” Nadella said. “Data centers don’t get built overnight.”
CFO Amy Hood assured investors Microsoft is working to “balance” its supply issues, but analysts believe the shortfall might limit their cloud business. Yet, optimism isn’t dead. JPMorgan analysts noted Microsoft’s big bet on OpenAI as “planting longer-term seeds for success.”
And despite their Reality Labs division taking a $4.4 billion operating loss, Meta is pushing forward with Llama, its own AI model. The losses highlight the risks tied to AI investments, especially for those trying to compete with Google and OpenAI.
The real question now is, will these massive AI investments pay off? Right now, it’s anyone’s guess. For every company that shows growth, there’s another dealing with setbacks and spiraling costs.
