Commercial message: The earnings season is practically over, as Nvidia is the last of the Magnificent 7 to report its results. American technology companies have long been among the most sought-after stocks from the perspective of investors, which is why their numbers were highly anticipated this time around. So what new information did we learn?
Within the current earnings season, it can generally be said that most companies delivered very good results, the only exception was Tesla, whose numbers were weaker. As in previous seasons, it played a major role Artificial Intelligence, in which companies are investing huge amounts of money. None of them wants to be left behind, so there is essentially a race among themselves to see which company can build the most powerful AI infrastructure.
More infomacYou can also find more information on this topic in the newly updated e-book Investing in Big Tech companies from XTB.
Massive investment in AI
In the last quarter alone, they invested Microsoft, Amazon, Alphabet and Meta approximately $115 billionMost of these funds are directed towards:
- specialized AI chips from Nvidia,
- data center expansion,
- infrastructure that will provide them with the future competitive advantage.
Although these investments have not yet they are not profitable, companies consider them to be an opportunity that only comes once in a generationSo it is clear that AI is becoming a key growth driver for all major technology players.
Stock performance: results are not enough, the market expects more
This group of companies has grown significantly in recent years, faster than most of the marketThis year, however, the situation is much more diverse:
- Alphabet +50%
- Nvidia +35%
- Microsoft + 17%
- The remaining four companies only –0,6 to +7%
(i.e. less than the S&P 500 index)
Magnificent 7 stock performance over the last 5 years. Source: seekingalpha.comPast performance is not a reliable indicator of future performance.
However, after several extremely strong years, it is beginning to become clear that investors "Good" results alone are not enough.
Market valuation is very high, and therefore investors expect companies to significantly exceed estimatesIf the first weaker signals appear, pressure may be put on the shares.
What does this mean for investors?
The Magnificent 7 continues to represent a group of companies that determine the direction of technological development and the overall mood in financial markets. Their performance often determines whether the market strengthens or whether caution prevails. Companies massively invest in artificial intelligence, are building extensive infrastructure and is trying to stay ahead of the curve in an industry that is changing faster than ever before.
At the same time, however, it is clear that Investor pressure has never been higherAt current valuations, the market is no longer accepting just average results. Companies must be able to not only meet expectations, but also regularly significantly exceed them. Any hesitation can immediately affect their shares. The upcoming period will therefore be crucial for the Magnificent 7Their ability to innovate, grow, and effectively leverage AI investments will determine whether they maintain their exceptional position in the years to come.
More infomacYou can also learn about individual companies from the Magnificent 7 group in the newly updated e-book Investing in Big Tech Companies from XTB: https://cz.xtb.com/investovani-do-big-tech-spolecnosti.
Investing is risky. Invest responsibly.
