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AI has powered the market to all-time highs.
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But this earnings season will be an important moment for Big Tech to show that massive AI spending is paying off.
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Here are three big questions investors have about AI before tech earnings kick off this month.
Big Tech companies are soon going to let investors know if all the hype is still worth it.
Amid tariff turmoil and market uncertainty, the tech trade continues to power the S&P 500 higher. With mega-cap tech earnings due to kick off later this month, investors are looking for clues to know if the AI-fueled momentum can keep powering stocks higher.
The launch of DeepSeek—a cost-efficient AI model from a startup in China—was an “existential moment” for the AI trade, according to Eric Sheridan, co-business unit leader of the TMT group at Goldman Sachs.
“There’s an increasing focus on the payoff or the return dynamic,” Sheridan told Business Insider. “How are we seeing enterprises use AI? How are we seeing consumers adopt AI applications in their day-to-day life?
Is AI technology delivering on its promise of increasing productivity and profit margins? Investors will soon be turning to second-quarter earnings season for answers.
Big Tech companies have poured billions into building out AI infrastructure, and there’s a lot of debate on Wall Street about how much more companies can spend.
As of February, Amazon, Microsoft, Alphabet, and Meta’s total AI investment for 2025 was over $300 billion, a notable increase from the $246 billion spent in 2024.
Competition in the AI space is fierce as Big Tech companies race to develop better large language models. And it’s still early stages, meaning that this level of capital expenditure could persist well into the future.
“There’s still pretty low visibility into what they’re going to spend next year,” Sheridan said of the Big Tech companies.
“I wouldn’t put a high probability on a slowdown,” he added.
A lot of money and effort is being poured into AI tools for companies, but investors want a clearer sign of what it all means.
Investors will look for clues on earnings calls that AI adoption is accelerating. They’re not just interested in whether Nvidia beats consensus expectations; they’re also looking for more widespread adoption of AI among other companies.
Investors have reasons to be optimistic, as there have been green shoots in previous months. The earliest signs of AI adoption have been showing up primarily in the software industry as companies adopt agentic AI to complete tasks autonomously.
