Shares of technology companies took a hit following a disappointing earnings report from a leading industry player. According to Quincy Krosby, Chief Global Strategist at brokerage LPL Financial, the focus of this earnings season has been on mega tech companies, and the sector had previously generated much excitement due to its strong performance at the beginning of the year. However, as Krosby points out, the growing expectations have also increased alongside this excitement.
One company that experienced a drop in its stock value was Intel, whose fourth-quarter earnings fell short of Wall Street’s predictions. This is due to ongoing efforts by the chipmaker to revamp its factories. Additionally, investors are anxiously awaiting profit reports from other mega-cap companies like Microsoft, which are considered crucial to the advancement of artificial intelligence (AI).
Krosby explains that investors are particularly interested in seeing the monetization of AI-enabled products, specifically those involving generative AI. Despite understanding the costs and time associated with this phase of AI development, the market now wants to see tangible results. The sentiment can be summarized as “show us some of the products.”