The latest round of big tech earnings reports is stoking concerns that investor confidence in artificial intelligence (AI) companies is set to decline. The tech-heavy Nasdaq 100 Index took a 2.6% hit, sealing its third consecutive weekly loss, after Google parent company Alphabet Inc. posted quarterly earnings that fell short of Wall Street expectations.
Following the disappointing outlook from “Magnificent Seven” tech stocks, other stocks including Southwest Airlines, United Parcel Service, and Whirlpool Corp. also stumbled, indicating that consumers may already be pulling back their spending. This is a major turnaround from the previous confidence instilled in the AI market, with the benchmark S&P 500 hitting 38 record highs this year.
While the direction of the economy appears positive with recent data indicating cooling inflation and economic growth, the rest of the ongoing earnings season is expected to have a large influence on whether consumer confidence will indeed rebound over the short term. Among those big-cap companies set to release their quarterly financial results over the course of next week are Apple Inc., Amazon Inc., Meta Platforms, and Microsoft Corp. “The setup for the next week is the bar is as high as it’s ever been and the headwinds are as strong as they’ve ever been,” Max Gokhman, senior vice president at Franklin Templeton Investment Solutions observed.