Major tech companies report strong quarterly earnings, largely due to significant investments in artificial intelligence. Despite outperforming analysts, investor reactions are mixed, focusing on the implications of rising AI investments for profitability. For instance, Alphabet announced an increase in capital investments to $85 billion to support AI initiatives, even as revenue and earnings exceeded predictions. Meanwhile, IBM also showed strong results but faced similar investor disappointment regarding future profitability from these investments. Overall, concerns over AI spending potentially harming margins in the short term overshadow strong earnings reports.
Despite strong performance from major tech companies like Alphabet and IBM, investor reactions have been mixed or negative due to concerns over rising AI investments impacting profit margins.
Alphabet's capital investments will increase by $10 billion to $85 billion this year to boost AI infrastructure and talent, causing investor caution despite above-expectation quarterly results.
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