Major Tech Earnings Focus on AI and Utility Sector

This week, major tech companies including Meta, Microsoft, and Amazon are set to release their earnings reports. The chief investment officer at Henan and Walsh Asset Management, Kevin Manah, underscores that spending on artificial intelligence (AI) is a pressing focus as Google has reported encouraging AI-related outcomes. Following Google, the market is keen to see how other tech giants like Meta and Microsoft handle their earnings amidst ongoing concerns regarding their substantial investments in AI technology. Manah attended the Nicks Asset and Wealth Management Summit in Boston, emphasizing that the long-term benefits of AI spending may not materialize immediately. He warns against under-spending in AI, suggesting that the financial commitment made now may only manifest positive returns in the future. In unexpected turns, he indicates that the utility sector is emerging as a beneficiary of the AI boom, contradicting its traditional perception as a stable but unexciting sector. He identifies three driving factors supporting future growth in utilities, including their defensive nature, attractive dividend returns, and their indirect connection to the AI revolution through data centers. Utilities like DTE Energy, Duke Energy, and Southern Company are notable mentions, as they supply energy not only to traditional customers but increasingly to power-hungry data centers. As projections suggest that data centers could consume 10% of the U.S. electricity grid within six years, the increased demand underscores the critical role of utilities, particularly those investing in nuclear energy. Investors are urged to consider the balance sheets and customer bases of utility companies in the coming years, indicating continued growth potential in this space.