Foray Advisory’s Post

Big Tech Faces Wall Street Skepticism Despite Strong Revenues Big Tech companies, including Microsoft, Alphabet, and Meta, struggled to impress Wall Street in recent earnings reports despite solid revenue numbers. Investor concerns center around slowing growth, rising costs, and regulatory challenges. While AI continues to be a positive factor, the market is increasingly focused on sustainable growth and profitability, leading to a more cautious investment outlook. #BigTech #Finance #Earnings #MarketTrends #WallStreet

Is tech giants' profit surge a temporary boom or sustained growth? In the last 10 days, four tech industry giants - Microsoft, Alphabet, Meta Platforms and Amazon - reported significantly higher operating margins, the best in years. However, investors may want to temper their expectations. Why don't higher profits last? The recent profit growth is a result of layoffs and other cost-cutting measures. However, these same companies are pouring their savings into massive spending on servers and data centers, which are crucial to the development of new artificial intelligence technologies. Although these investments are vital, their impact on these companies' bottom lines is complex due to the way capital expenditures (capex) are accounted for. Top executives, including Microsoft CFO Amy Hood, have explicitly said they expect a slight decline in profits due to the huge investment in AI. For example, Hood expects Microsoft's operating margin to decline slightly by 2025 despite significant investments. This situation presents investors with a dilemma: How to assess the long-term viability of large investments in AI? Currently, the ability of these tech giants to generate enough revenue from new AI products to offset increased attrition remains a big question mark. What do you think, how will tech giants navigate the complex balance between innovation costs and profitability? Let's talk! Source: theinformation.com

Microsoft’s Q4 earnings beat expectations, but the market’s reaction highlighted a crucial challenge facing Big Tech: the balancing act between massive AI investments and investor expectations. Azure’s growth, though impressive at 29%, fell just shy of forecasts, raising questions about the ROI of ongoing heavy spending in AI. As we navigate this rapidly evolving landscape, one thing is clear: the cost of underinvesting in AI could far outweigh the risks of over-investing. For companies like Microsoft, Amazon, and Google, the stakes are high, but the potential rewards of leading the AI revolution are even higher. In this race, it’s not just about staying ahead—it’s about defining the future. Let’s keep a close watch on how these investments shape the next chapter in technology. #ArtificialIntelligence #TechInvestment #Innovation #Microsoft

Alphabet, Microsoft earnings show hefty AI bets are driving growth https://lnkd.in/dGh72AcY Download Economic Times App to stay updated with Business News - https://lnkd.in/eK4XZsX #alphabet #microsoft #artificialintelligence #artificialintelligenceforbusiness

Big Tech companies have boosted their capital spending by 50 per cent to more than $100bn this year, as they race to build the infrastructure supporting artificial intelligence, despite growing scepticism from Wall Street about the returns on the unprecedented investment. Microsoft, Alphabet, Amazon and Meta all revealed massive increases in spending in the first six months of 2024 — totalling $106bn — in their latest quarterly earnings reports, as their leaders brushed off stock market jitters to pledge further investment hikes over the next 18 months. https://lnkd.in/eRKTNvKW

The CEOs of top-performing "TECH" companies, such as Jeff Bezos (AWS), Elon Musk (Tesla/Paypal/Starlink), Satya Nadella (Microsoft), Sam Altman (Open AI), Jensen Huang (Nvidia), and Sundar Pichai (Google), come from engineering backgrounds. Does it mean the CEO and/or the Board must have technical skills for a tech company to succeed? Well, data from a 2018 Havard business review suggest that the odds of succeeding as a Tech company CEO are increasingly in favor of #engineers than MBAs. Is a #digitalhealth or #healthtech company a tech company? What are your thoughts? Image source: Alex Wang

In transformations, timing matters: Pre-emptive transformations are initiated while total shareholder return (TSR) is in line with or ahead of industry averages. These transformations create significantly more value in the medium and long run than reactive transformations initiated after TSR has already dipped below the peer group. Transforming preemptively—before a performance gap has opened up—means transforming from a position of strength, subject to less pressure and scrutiny: leaders are empowered to focus on identifying options for future advantage, rather than on purely defensive moves, such as divestments. Consider, for example, Microsoft’s remarkable trajectory over the past decade: After stagnating performance from 2009 to 2012, the company managed to achieve some momentum between 2012 and 2014 (achieving 36% annualized TSR). Not content with this recovery, Microsoft’s then-incoming CEO Satya Nadella made changes to lay the groundwork for future success: He oriented the company toward the new dominance of cloud, even though this trend had not yet damaged the bottom line. This move set Microsoft up to nearly triple its stock price in the first four years of Nadella’s tenure. Nevertheless, he announced yet another restructuring in 2018, setting up an AI division, which was soon bolstered by Microsoft’s early $1 billion investment in OpenAI. 2 Today, Microsoft is the most valuable company in the world—illustrating how preemptive transformation with heavy investment allows sustaining performance in an evolving competitive environment and amid significant technology changes. Source: BCG #transformation

With Microsoft’s recent earnings report now available, is MSFT still a smart buy? Let’s dive into the key financials and strategic insights to determine if this tech giant remains a solid investment choice. . Microsoft (NASDAQ: MSFT) continues to assert its dominance in the tech landscape, driven by strategic investments in AI and cloud computing. . Despite challenges facing Big Tech, Microsoft has maintained impressive growth, with a 15% YoY revenue increase, surpassing $245 billion annually. . As the broader tech sector grapples with translating AI investments into profitability, Microsoft stands out, positioning itself as a leader in the evolving AI-driven economy. . 1. Microsoft’s AI Momentum: With a staggering 60% rise in Azure AI customers and a 15% YoY revenue growth, Microsoft's strategic investments in AI and cloud technologies are translating into substantial market gains. . 2. Cloud Leadership: Microsoft's Azure, powered by advancements from AMD and Nvidia, continues to dominate, driving a 23% surge in cloud revenue and setting the stage for long-term growth. . 3. Strategic Capital Investments: While Big Tech faces challenges, Microsoft's focus on expanding its global data center footprint and integrating cutting-edge AI infrastructure makes it a standout performer, solidifying its position as a must-buy stock. . Are you loving the content you’re devouring right now and want to read more? Don't miss out on the opportunity to master the stock market and pave the way to financial success.  . Give a try and Subscribe to our newsletter (https://lnkd.in/gxVjJ_Nw) for exclusive insights and in-depth analysis delivered straight to your Inbox.  . #stockmarkets #stocks #Investing #StocksInvesting #trading #daytrading #onlinetrading #stockmarket #wallstreet  . Disclaimer: The content on this post is for educational purposes only and not financial advice. Stock market investments involve risks, including loss of principal. The author and publisher are not liable for any losses or damages from using this information.

How Satya Nadella created a 'learn-it-all' culture at Microsoft to help it become a $3 trillion powerhouse by Jyoti Mann Business Insider #SatyaNadella transformed #Microsoft by focusing on #cloudcomputing and #opensourcesoftware. Nadella also envisioned shifting Microsoft's culture from "#knowitalls" to "#learnitalls." Here's how Microsoft's big bets on #AI have helped boost its #marketvalue to more than $3 million. When Satya Nadella took over as #CEO of Microsoft in 2014, he was on a mission to transform the company's culture. A few months into the role as its CEO, the former engineer laid out his #vision in a memo to staff. He said, "We must each have the courage to transform as individuals…With the courage to transform individually, we will collectively #transform this company and seize the great opportunity ahead." https://lnkd.in/eD-f2DXK

🚀 Top CEOs Speak on Major AI Investments! 🚀 Leading tech companies are doubling down on AI, with significant capital investments to drive innovation and growth. Here’s what top executives have to say: 💡 Alphabet: Sundar Pichai, CEO: “When you go through a curve like this, the risk of underinvesting is dramatically greater than the risk of overinvesting.” (July 23) Ruth Porat, CFO: “Capex in the second quarter was…driven overwhelmingly by investment in our technical infrastructure, with the largest component for servers, followed by data centers.” (July 23) 💡 Microsoft: Satya Nadella, CEO: “What we learned even from the cloud transition…was similar in the sense it was both a knowledge-intensive and a capital-intensive transition.” (July 30) Amy Hood, CFO: “Cloud and AI-related spend represents nearly all of total capital expenditures. Within that, roughly half is for infrastructure needs…that will support monetization over the next 15 years and beyond.” (July 30) 💡 Meta: Mark Zuckerberg, CEO: “At this point I’d rather risk building capacity before it is needed, rather than too late.” (July 31) Susan Li, CFO: “We currently expect significant capex growth in 2025 as we invest to support our AI research and our product development efforts.” (July 31) 💡 Amazon: Andy Jassy, CEO: “While we’re investing a significant amount in the AI space and in infrastructure, we would like to have more capacity than we already have today.” (Aug 1) Brian Olsavsky, CFO: “We expect capital investments to be higher in the second half of the year…to support the growing need for AWS infrastructure as we continue to see strong demand in both generative AI and our non-generative AI workloads.” (Aug 1)