As we were approaching the end of July, it looked like the AI rally and tech shares were going to be in for a rough summer.
But fast forward to two weeks later, suddenly we’re talking more about fresh record highs again than any concerns that might put a dent to the overall market sentiment
There’s no doubt that the latest earnings round from hyperscalers in particular has helped to alleviate investor concerns, or at least cast them aside for the time being. For a while now, the story has been can all the massive investment on AI pay off for tech firms – especially big tech? The major worry is that the massive outlay in terms of capital expenditure on AI would grow too big, with returns not being able to catch up.
Alphabet (Google) kicked off the earnings season in playing to that narrative, recording its first ever quarter with negative free cash flow as a public company. But come the end, other tech firms took that as a learning lesson and told investors what they needed to hear. That being capital expenditure on AI is under control and that the money will come through.