Q1 Tech Earnings Preview

The AI-driven cloud and chip industries come into focus in the next month as Microsoft, Meta Platforms, and others prepare to report earnings.

S&P 500 companies have strung together consecutive quarters of earnings growth and are on pace for a third in the first quarter, according to Wall Street analysts. Without big tech, however, it's questionable if the broad market's earnings would be up at all.

The largest U.S. info tech firms begin reporting Q1 results this week as focus turns to growing competition and how artificial intelligence (AI) advancements are creating an increasingly bifurcated tech sector. Some might call it a widening split between the AI haves and have-nots. Semiconductor heavyweights and other tech firms seen best incorporating AI into their product lines have defined recent stock and earnings performance, led by Nvidia (NVDA), Microsoft (MSFT), and Meta Platforms (META).

On the other side are companies generally viewed as not fully up to date in AI like Apple (AAPL), which saw its stock slide in Q1. So did shares of semiconductor firms struggling to keep up with the changing industry. Intel (INTC) shares, for instance, lost ground as customers bought AI chips more aggressively than the central processing units (CPUs) the longtime chipmaker is known for.

As earnings season continues, investors should look for more insight into how firms across the sector are incorporating AI into their businesses and measure any success against the performance of key products like iPhones and the cloud. Much is changing.