GoKawiilWall Street is growing increasingly divided over AI's winners and losers after the world's largest technology companies reported earnings and affirmed or raised their capex forecasts, suggesting the spending spree isn't letting up yet.
Nearly $2 trillion has moved this week into or out of the six megacaps that have reported earnings this season so far. The three biggest hyperscalers, Amazon , Microsoft and Alphabet , have all seen their market caps surge after posting strong cloud growth. It suggests that investors believe returns may be in sight after the companies committed to spend billions on AI.
Microsoft gained over $600 billion in market cap this week, while Amazon and Alphabet both added more than $400 billion.
On the other end, Meta has seen its stock plunge after earnings, as investors weren't sold on its AI investment strategy, erasing about $85 billion from its market cap this week. Apple suffered a steeper drop, losing more than $350 billion in market value, as the memory shortage weighed on its outlook. Tesla lost about $7 billion in market value after it went cash flow negative and forecast higher spending.
AI spending among the megacaps is "trending" toward almost $800 billion over the next 12 months, Jason Greenberg, co-head of global tech, media and telecom investment banking at Jefferies, told CNBC's "Squawk on the Street" on Friday.
Investors no longer question whether people are adopting AI, or if there's real demand for chips and compute capacity, Greenberg said.
"It's whether in the long term demand is going to be sufficiently profitable to warrant all of this investment," Greenberg said. "I think overall that's the real issue that we're struggling with right now."