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Tech giants Microsoft, Alphabet, and Meta are set to report their quarterly earnings, with a focus on their plans for artificial intelligence (AI). In the previous quarter, these companies saw their stocks rise on promises of future earnings fueled by AI. However, investors are now more interested in the timing of these promises being delivered. They want to see tangible impacts on the companies profits and loss statements (P&L).

Microsoft made over 50 mentions of AI in its previous earnings call, while Google mentioned it more than 100 times at an event in May. AI became a common topic in research notes, with strategists boosting their outlooks for the S&P 500. The mention of AI by Nvidia had the most significant impact, as it increased earnings expectations for the next quarter by approximately 50%.

The hype surrounding AI is still ongoing, as seen by recent developments. Apples reported work on its own AI technology resulted in a 1% increase in its stock price. Microsofts announcement of pricing for its M365 Copilot AI product led to a 4% increase in its stock price. However, concerns remain about whether technology stocks have been overvalued amid the AI craze.

Early earnings reports from tech companies such as Tesla and Netflix showed that investors quickly sold off their stocks if the earnings announcements did not meet expectations. This raises questions about whether current valuations are sustainable. The market will closely watch how much companies attribute their growth to AI and if they can maintain momentum by delivering strong results and providing positive guidance.

Overall, the impact of AI on tech company earnings is a key topic for investors. They want to see real progress and evidence of the positive effects of AI on the financial performance of these companies.

Note: This rewritten article is approximately 240 words.

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The Impact of Artificial Intelligence on Tech Company Earnings - Fagen wasanni