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The Markets' AI Guessing Game, Moltbook Explained, AI-Induced Layoffs?
Does the market know who's winning the AI race or is it just pretending?
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Welcome back to our new Big Technology Agenda Setter series, in your inbox most Mondays. What do you think of this new edition? Let us know the comments!
Meta and Microsoft both beat earnings expectations last week yet Wall Street rewarded one and punished the other. Meta’s stock jumped 10% after earnings, and Microsoft’s fell 10%, its worst day since 2020.
The different reactions might be sign of increased market discipline. Meta’s execs touted how AI is already improving its core ad business while Microsoft’s focused on their continued architectural buildout and less on near-term ROI.
But the extreme swings most likely mean the market has almost no idea of who’s winning the AI race and is looking for any little signal of where it might head. Consider that Meta today is nowhere close to realizing its vision for ‘personal superintelligence’ and Microsoft is far away from completing the build-out phase of its AI effort. Current earnings results — though it might be tempting to read them as such — have little bearing on who might win over time.
Until the AI market matures, volatility will likely be the rule. We’ll see attempts to apply big explanations to tiny things. A small slowdown in growth might be read as a sign a company is losing the AI race. A tick up in CapEx might signal it’s doubling down.
Right now, most within the AI industry will tell you they don’t know whether the ultimate winners will be chip companies, datacenter builders, foundational model sellers, or the application layer.
Yes, we can infer. And some big moves will be meaningful. But this is going to take a long time to sort out. It’s something to keep in mind as Google and Amazon report earnings this week, where more of the same might be in store.
What to expect this week:
Alphabet reports quarterly earnings on Wednesday, followed by Amazon on Thursday.
On Tuesday, the Senate Commerce Committee will convene to discuss a range of issues that includes a bipartisan bill to create a national network of AI-powered research labs.
The Senate Commerce Committee also has a Wednesday hearing on the future of self-driving cars, featuring testimony from witnesses representing Tesla, Waymo and the Autonomous Vehicle Industry Association.
AI will also be a player in this upcoming weekend’s Super Bowl ads. Tech firms expected to air pricey ads to market their AI products include Meta (for its Oakley smart glasses), OpenAI and Wix. The Big Game will also include non-tech brands like Svedka Vodka and Avocados from Mexico whose ads were made using generative AI.
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Under The Hood: Moltbook
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