A week dominated by central bank policy and corporate earnings ultimately revolved around a single theme: artificial intelligence. According to Bloomberg, results from America’s largest technology companies underscored the industry’s deep commitment to AI investment—while also revealing growing investor impatience with the staggering costs that come with it.
The S&P 500 and Nasdaq 100 both edged toward record highs as companies from Microsoft to Amazon poured billions into AI infrastructure. Yet investors were quick to punish firms where spending failed to yield visible results. Shares of Meta Platforms Inc. plunged in their biggest single-day drop in three years after the company’s warnings of ballooning AI costs rattled markets. Microsoft also fell more than 4% over two days after cloud revenue growth disappointed.
Meanwhile, Amazon.com Inc. and Alphabet Inc. were rewarded for coupling ambitious AI spending with tangible performance. Amazon’s stock jumped nearly 10% on Friday after strong results from its cloud arm, Amazon Web Services, and new details from CEO Andy Jassy about how AI tools—including a forthcoming shopping chatbot—could add $10 billion in annual revenue. Alphabet climbed 2.5% on Thursday as Google Cloud sales surged 34% to $15.2 billion, with revenue from AI-driven products tripling from a year earlier.
“This is the first quarter we’ve seen where more capital expenditure wasn’t uniformly rewarded,” said Allen Bond, portfolio manager at Jensen Investment Management. “There’s more focus on return on invested capital.” That sentiment was echoed by Kevin Gordon, head of macro research at Charles Schwab, who told Bloomberg that investors are now demanding proof of AI’s profitability rather than just its potential.
Despite signs of skepticism, enthusiasm for the broader AI trade remains strong. Nvidia Corp.—whose chips power much of the world’s AI infrastructure—soared nearly 9% this week, becoming the first company to reach a market value of $5 trillion. Other beneficiaries included Seagate Technology Holdings Inc., Western Digital Corp., Broadcom Inc., and Super Micro Computer Inc., all of which gained as investors bet on continued demand for AI hardware. Even Caterpillar Inc., which has profited from a construction boom in data centers, surged 10%.
Apple Inc., which has been more restrained in its AI investments, managed a modest 2.9% rise for the week despite mixed earnings. Meanwhile, Meta’s heavy spending and lack of corresponding AI revenue growth highlighted how unevenly Wall Street is judging the sector’s leaders.
According to data compiled by Bloomberg Intelligence, six of the so-called “Magnificent Seven”—Amazon, Apple, Alphabet, Microsoft, Meta, and Tesla—delivered collective quarterly profit growth of about 27%, handily surpassing the 15% that analysts expected before earnings season began. The broader S&P 500 is tracking 13% growth so far.
Investors will now turn their attention to Nvidia, often seen as the “final boss” of AI earnings season. The chipmaker is set to report results on November 19, with expectations running high after CEO Jensen Huang offered an upbeat outlook in Washington, D.C., this week.
“Earnings were expected to be good and big tech delivered,” said Bob Savage, head of markets macro strategy at BNY. “It’s hard to be bearish on a sector that makes money so consistently.”
Still, as Bloomberg noted, this quarter may mark a turning point: the moment when investors stop applauding AI spending for its ambition—and start demanding that it actually deliver.
