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Earnings season is just around the corner and the big tech companies are gearing up to release their latest quarterly results to investors. And with artificial intelligence the topic du jour, companies ability to monetize it will be at the forefront of investors’ minds, Wedbush Securities said.
“Our myriad of field checks globally over the past month give us a high level of confidence that the AI Revolution monetization has now begun to hit its next gear of growth as the baton has been handed from semis to the software phase with use cases exploding across the board,” analyst Dan Ives wrote in an investor note.
Among companies he expects to benefit from first-quarter results include Microsoft (NASDAQ:MSFT), Alphabet (GOOG) (GOOGL), Amazon (AMZN), Palantir (PLTR) and Meta Platforms (META).
Also expected to benefit include several cybersecurity companies, including Zscaler (ZS), CrowdStrike (CRWD), Palo Alto Networks (PANW), CyberArk (CYBR), Checkpoint Software (CHKP) and Tenable (TENB).
Microsoft’s ‘iPhone moment’
Along with Nvidia (NVDA), Microsoft is viewed as one of, if not the largest beneficiary of AI spending, thanks to its partnership with OpenAI. Everything from increased cloud computing spending to generative AI add-ons to Copilot have aided Satya Nadella and his company in the eyes of investors, resulting in the company having a market cap of more than $3.1T.
“We strongly view this as Microsoft’s ‘iPhone Moment’ with AI set to change the cloud growth trajectory in Redmond [Microsoft’s headquarters] the next few years and our recent checks giving further confidence in this dynamic for the March quarter,” Ives said.
There has been an acceleration of adoption for generative AI and Copilot activity over the past month, which has in turn helped Azure cloud deals, Ives added, citing recent checks with Microsoft customers, CIOs and partners.
For every $100 worth of cloud Azure spend over the past few years, there could be as much as $35 to $40 of additional AI spending going forward, Ives posited.
A consensus of analysts expect the company will earn $2.84 per share on $60.84B in revenue this coming quarter.
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