Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc (NASDAQ:GOOG), Amazon.com Inc (NASDAQ:AMZN), and Meta Platforms Inc (NASDAQ:FB) will release earnings this week, with the Street's focus expected to be on what the enterprise spending trajectory looks like on the cloud in a "choppy" macro environment.
In an update to clients, Wedbush analysts noted that Microsoft is a "major bellwether" for cloud spending and especially the appetite for generative AI spending among chief investment officers, with Wedbush analysts expecting the company's all-important Azure revenue growth to exceed Microsoft’s own guidance based on their positive checks in the field.
"Overall, we expect a relatively healthy 3Q tech earnings season kicking off in full gear this week with stronger than expected cloud results a key theme that should be the catalyst to move the tech sector higher into year-end despite the Fed/10- Year lurking shadow," the analysts wrote.
They added that digital advertising industry estimates remain "broadly encouraging" as growth rates continue to accelerate across digital segments.
On AI specifically, Wedbush analysts revealed that their favorite tech plays were Amazon, Alphabet, and Meta, as they believe the impact of the AI cycle on consumer internet will be "massive" and it will start with the cloud service divisions, Amazon’s AWS and Alphabet’s GCP.
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