Microsoft, Alphabet Face a ‘Show Me’ Moment After Meta Misfire

The stakes are high as two of the biggest artificial intelligence players prepare to unveil results, a day after Meta Platforms Inc. alarmed investors with its forecast.

Both Microsoft Corp. and Alphabet Inc. are due to deliver what are seen as pivotal reports after the market close. Traders expect fresh insight into how broadly consumers and enterprises are adopting AI services — and what growth will look like from here. Scrutiny will be intense after Meta revealed it will spend billions more dollars than expected this year — triggering a stock selloff.

More disappointment could put bears in charge of the near-term narrative. Microsoft and Alphabet — which have a combined market capitalization of $5 trillion and together comprise 9.3% of the S&P 500 Index — need to leap over high expectations to justify their rallies and validate the AI optimism fueling the market’s advance.

“This is the show-me quarter for Microsoft and Alphabet in particular, but also AI broadly,” said Michael Arone, chief investment strategist at State Street Global Advisors. “Their prices are reflective of a perfect environment, and a modest beat won’t be enough this time. They need to show their ability to surpass even elevated expectations. That’s critical for the market to rebuild its momentum.”

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