The AI sector had one of its best sessions in recent memory on Friday after Intel blew past first-quarter estimates and gave strong second-quarter guidance.
Intel’s report confirmed suspicions that CPU demand is surging due to agentic AI, which lifted peers like AMD and Arm Holdings by double digits as well. Taiwan Semiconductor jumped 5% as the report signaled strong chip demand, and the iShares Semiconductor ETF, which holds top AI chip stocks like Nvidia, gained 5% as well.
The market’s response to the news shows that there’s room for growth in AI stocks if the facts on the ground warrant it.
After a jump on Friday, a new round of earnings reports could lift AI stocks further.
The AI sector had one of its best sessions in recent memory on Friday after Intel blew past first-quarter estimates and gave strong second-quarter guidance.
Intel’s report confirmed suspicions that CPU demand is surging due to agentic AI, which lifted peers like AMD and Arm Holdings by double digits as well. Taiwan Semiconductor jumped 5% as the report signaled strong chip demand, and the iShares Semiconductor ETF, which holds top AI chip stocks like Nvidia, gained 5% as well.
The market’s response to the news shows that there’s room for growth in AI stocks if the facts on the ground warrant it.
This week will see the peak of tech earnings season with “Magnificent Seven” companies like Alphabet (GOOG +1.87%) (GOOGL +1.78%), Microsoft (MSFT +0.04%), Amazon, Meta Platforms, which all report earnings on April 29, and Apple, which reports on April 30.
Image source: Getty Images.
What to look for from tech earnings week
All four of the companies reporting on Wednesday are the biggest hyperscalers in the world and are investing heavily in AI compute and cloud computing infrastructure. Combined, they are set to spend about $700 billion on capital expenditures this year, much of which will go to AI.
So while Intel had some important updates to share on CPUs, these are the best publicly traded companies to watch for insights into AI usage. In particular, Alphabet and Microsoft will be key to watch.
Alphabet is arguably the most diversified AI company, as it has a leading foundational model in Gemini, it makes AI chips (TPUs), it has a large cloud computing division, and it’s a leader in physical AI with the Waymo autonomous driving business. It also generates tens of billions of dollars through its leading digital advertising business.
Alphabet
Today’s Change
(1.78%) $6.12
Current Price
$350.52
AI won’t be the major driver of Alphabet’s financial results, but investors should pay attention to commentary about Gemini, TPU adoption, cloud growth, and its capex plans. Its success with Gemini and AI has been a big reason why the stock has soared over the last year, and it’s now the most valuable of the hyperscalers.
Microsoft, meanwhile, was seen as the early leader in AI, but the stock has struggled due to weak adoption for Copilot, its AI assistant, an increasingly strained relationship with OpenAI, and pressure on the stock price as software stocks have plunged on fears of AI disruption. Nonetheless, Microsoft’s recent results have been strong. Investors will want to focus on its cloud growth and signs of AI adoption in both Copilot, including programs like Microsoft 365 Copilot, and its OpenAI integrations like Azure OpenAI.
Microsoft
Today’s Change
(0.04%) $0.19
Current Price
$424.81
Will chip stocks soar again?
All five of these companies are huge chip customers for companies like Nvidia, Arm, AMD, Micron, and others, and a strong round of numbers could set off another leg up in the semiconductor sector.
Valuations for start-ups like OpenAI and Anthropic have soared, and demand for chips continues to outpace supply. Despite earlier concerns about an AI bubble, adoption of the new technology is spreading, justifying the stock boom. As the reports from big tech companies roll in this week, any promising signs of AI adoption could extend that tailwind.
