Point of No Return
Are Alphabet, Amazon, Meta and Microsoft burning cash on AI?
With nearly $700 billion earmarked this year for the artificial intelligence arms race, these four tech titans aren’t holding back.
Smart investment for some, desperate gamble for others. As quarterly earnings roll in, shareholders can’t stop debating this massive bet.
These four hyperscalers increasingly resemble industrial behemoths. Their balance sheets are ballooning from AI investments while free cash flow shrinks dramatically (forcing Alphabet and Meta to pause their stock buyback programs in the first quarter).
Meanwhile, the return on these pharaonic investments remains unproven.
Model student Alphabet managed to calm market fears with its Cloud revenue up 63% and operating margins jumping to 33% from 18% last year.
But wild child Meta Platforms couldn’t resist giving shareholders another adrenaline shot, raising its capex guidance to $145 billion through 2026. The market immediately punished the stock with an 8.6% drop.
Caution: despite the V-shaped market rebound, speculative appetite is starting to wane.
My trading plan
Until proven otherwise, buyers remain in control.
The market touched the symbolic 50,000-point threshold late last week before profit-taking kicked in, again showing some market caution.
In this context, I’ll favor long trades targeting short sellers’ stop-losses above the 50,137-point resistance. Beyond that level, however, extreme vigilance is required.
Happy trading!
Maxime holds two master’s degrees from the SKEMA Business School and FFBC. As founder and editor-in-chief of NewTrading.fr, he writes daily about financial trading.
The phony war
Controlled Skid
Peace pipe