Earnings reports from Big Tech names like Microsoft (MSFT), Meta (META), and Amazon (AMZN) are on deck this week, potentially giving more insight into how the tech sector will play out as the market sees a rotation into smaller-cap names.
JPMorgan US head of investment strategy Jake Manoukian joins Morning Brief to give insight into Big Tech earnings and what investors need to know about the tech sector going forward.
Manoukian believes that while the initial AI hype might be decreasing for some, the market is still witnessing the early innings of AI development: “What gives us comfort as investors is these companies, these hyperscalers are driving this investment through cash flow. This is very different than the kind of internet boom in the 2000’s when companies had to take capital from investors, take capital from the bond market to build out the internet. AI cap-ex from the for biggest hyperscalers is going to be $200 billion this year. Last year they did $270 billion in free cash flow.”
The analyst believes this balance will allow companies the “wiggle room to actually build the ballpark” of AI.
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