That’s the takeaway from today’s Morning Brief, things you can do Sign up To receive in your inbox every morning:
The years of cost efficiency being enough are over and investors profiting from Big Tech are looking for more.
Driven by huge expectations of AI-fueled transformation and stories of sustained growth, the market is applying the same fanatic logic of more with less.
But instead of executives boasting about their efficiency in getting through tough times, shareholders are pushing for perfection.
Alphabet (GOOG, GOOGL) and Microsoft (MSFT) faced pressure this week. The pair beat analysts’ expectations, but investors focused on perceived weak points, and collectively waited for excellent results to justify holding expensive stocks.
But the areas that appeared soft — advertising revenue and cloud growth — only looked weaker when investors applied a harsher rubric to the trillion-dollar giants. It is not enough to flirt with, or beat, predicted figures for results. Only tremendous success can fully satisfy Big Tech shareholders.
Meta (META) and Amazon (AMZN) delivered the goods Thursday, offering strong outlooks for the coming months, and in the case of CEO Mark Zuckerberg, offering a sweetener: a new dividend. Investors were happy.
The diverging paths of Big Tech’s brothers and sisters this week highlight the unforgiving judgment of investors addicted to abundance. Just doing great things won’t cut it.
As analyst Dan Ives said, after a successful report from Microsoft, the quarter “should be printed and hung in the Louvre.”