Microsoft and Google are spending a ton of money on AI infrastructure, analyst says

Both Alphabet (GOOG, GOOGL) and Microsoft (MSFT) posted quarterly results that topped Wall Street estimates. The big takeaway from both reports? That generative artificial intelligence is here and companies are spending on it, says both Baird Technology Desk Sector Strategist Ted Mortonson and RBC Capital Markets Software Equity Analyst Rishi Jaluria.
"The commentary out of both Google and Microsoft, I think, tells us that there is real demand for AI... there's actual money being put behind this. It's not just hype. It's not just people talking about it. There's actual capital being put to work," Jaluria tells Yahoo Finance's Morning Brief.
Mortonson agrees. "We are going through, really, a generational infrastructure build," Mortonson says, adding that both Microsoft and Alphabet have an "advantage" because their "data center footprint already exists."
Jaluria notes that investors "will be patient" with Microsoft's big spending on infrastructure as long as the company's AI-related businesses continue to show growth. As to why investors were less happy about Meta's (META) AI spending, Mortonson thinks it may come down to "a game of positioning." "Meta was extremely crowded going into the print. There's some people that, quite frankly, didn't like some of the unprofitable spend," Mortonson says. He believes that Meta is "very attractive" given how hard the stock was hit by its results, but the Microsoft does have a "huge advantage" due to its enterprise business.
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[@ishi-xx5kq]

Free money era ended when fed raised rates and all of the sudden AI is the only thing tech can sell to forward earnings. While the tools themselves are useful, the ROI is very questionable. I'm thinking cybertruck / Metaverse level hype and fail

[@AcesCosmo]

Agree!

[@Redhookguy2000]

Classic blue link search is dying

[@jamesstpatrick8493]

Its alot of hype and leverage

[@Gabeyre]

Can AI help Yahoo Finance make better thumbs and grapics?

[@pauldannelachica2388]

❤❤❤❤❤ AI and DATA IS new gold and oil in the modern world

[@zevan6147]

Real?

[@zevan6147]

😯

[@MatthewMS.]

I don’t know 🤷🏼‍♂️ but elon musk is going to change the world! j/k he’s crazy

[@Gabeyre]

Yes He will. If not directly atleast indirectly.