US Tech Giants to Benefit from AI-driven Cloud Business Growth

US Tech Giants to Benefit from AI-driven Cloud Business Growth

The Resilience of Tech Giants in the Blockchain Industry

Tech giants in the US are on the cusp of a positive shift in their cloud business after facing a nearly year-long decline in the sector. This comes as a relief to these companies as clients start to increase their tech expenses, indicating signs of a resilient economy. One of the main factors contributing to this expected improvement is the increased interest in artificial intelligence (AI), a trend that is gaining traction across various industries.

Four of the biggest tech companies, Amazon, Meta Platforms Inc, Microsoft, and Alphabet, are expected to release their earnings reports in the coming week. These companies, collectively valued at over $6 trillion, hold significant influence over the tech business landscape, particularly in the areas of cloud computing and AI. Their financial results are eagerly awaited as they will provide insight into the overall market and potential revenue growth.

These tech giants have made substantial investments in AI products and research, recognizing the vast potential of this technology. The expectations for their earnings reports are centered around metrics that demonstrate the traction and adoption of AI-based offerings. The underlying belief is that increased user traction will ultimately lead to meaningful revenue growth in the long term.

Analysts polled by Refinitiv have predicted the growth rates for cloud computing businesses of Alphabet and Amazon at 24.4% and 9.8% respectively. While these growth percentages may appear low, they would still represent significant figures for these cloud giants. On the other hand, Microsoft Cloud’s growth is projected to be 13.7%, marking its lowest growth rate since 2017.

Despite these seemingly discouraging figures, some analysts hold a more optimistic view of the situation. Rishi Jaluria, an analyst at RBC Capital Markets, believes that these companies possess the resilience to navigate through the challenging market conditions until a more favorable environment emerges. The macroeconomic factors affecting the industry have not worsened significantly, and companies have been adapting their strategies to sustain operations in this climate.

Jaluria’s optimism is further supported by a recent survey conducted by RBC Capital, which indicates that enterprise technology buyers are actively investing in generative AI projects. The survey revealed that 80% of the 150 surveyed buyers plan to allocate funds towards these endeavors. Moreover, these buyers anticipate higher IT expenses in the current year compared to 2022, indicating a positive outlook for the industry.

In terms of advertising, Meta Platforms and Alphabet are expected to experience an increase in ad spending. Meta, in particular, is likely to witness its fastest growth in the last six quarters as consumers become more receptive to digital advertising. The company heavily relies on digital advertising as its primary revenue source. Similarly, Alphabet is poised to benefit significantly from the rise in consumer spending on digital ads. Analysts at Bernstein predict that the digital ad space is slowly climbing back up after a sluggish period, with Alphabet’s revenue growth expected to reach 4.5% in Q2, marking its highest growth rate in the past three quarters.

The expected improvement in the cloud businesses of these tech giants, coupled with their deep involvement in AI and advertising, paints a positive picture for the blockchain industry. Despite the lower growth rates compared to previous years, there are indications that these companies have the capacity to weather the storm and adapt their strategies accordingly. The market eagerly awaits their earnings reports as a bellwether for the tech industry, particularly in relation to cloud and AI. As the economy rebounds and interest in cutting-edge technologies continues to grow, the future of these tech giants in the blockchain industry appears promising.