Microsoft sinks, chipmakers climb as AI rally faces divide
quarterly results from Microsoft melted $340 billion of stock market value on Tuesday from it and rival heavyweights racing to dominate artificial intelligence technology, while Nvidia and other AI chip sellers rallied after results from Advanced Micro Devices.
The gains in chipmakers and losses in their biggest customers underscored a divide in the AI landscape, with investors recently questioning whether Wall Street's AI rally may have become overextended.
«Microsoft reported some deceleration in its core cloud business, but a huge increase in capex. That represents a transfer of wealth from Microsoft shareholders to Nvidia shareholders,» said Gil Luria, senior software analyst at D.A. Davidson.
In its report after the bell, Microsoft said revenue from its Intelligent Cloud unit — home to the Azure cloud-computing platform — jumped 19% to $28.5 billion in the quarter ended June 30, but missed analysts' estimates of $28.7 billion, LSEG data showed.
Its capital expenditure, including finance leases, jumped 78% in the quarter to $19 billion, with Microsoft saying it needs to expand its global network of data centers and overcome capacity constraints to meet AI demand.
Meta Platforms dropped about 3%, while Amazon lost 2.8% following Microsoft's results. Apple, Alphabet and Tesla were each down about 0.5%.
Investors are impatient to see more results from massive investments in AI, said Daniel Morgan, senior portfolio manager at Synovus Trust.
«That's what messing up the whole thing. The stocks traded way up in
