Tech giants Microsoft, Meta, and Apple have recently reported their earnings, providing insights into the state of the industry. While Microsoft shares experienced a decline due to concerns over its AI expenses and worries about the impact of the global chip shortage, investors remained optimistic. Similarly, Amazon’s shares slid after its revenue missed expectations, but its cloud-computing unit, Amazon Web Services, reported impressive revenue growth of $26.3 billion for the second quarter, surpassing analyst estimates.
Apple managed to beat expectations, but Wall Street remains cautious about the impact of the company’s recent announcement of privacy changes at its Worldwide Developers Conference. Despite some setbacks, the tech industry continues to prioritize the development of artificial intelligence (AI), with several chip partners also reporting their earnings this week.
Intel faced challenges as its shares declined during mid-day trading following its second-quarter earnings report, which included the announcement of layoffs. The company’s decision to accelerate the production of its Core Ultra AI CPUs impacted its profitability, according to Intel CEO Pat Gelsinger. Weaker-than-expected guidance for the third quarter, coupled with strong guidance from rival Advanced Micro Devices (AMD), suggests that Intel’s share of the server market may decline.
Analysts at Jeffries expressed doubts about Intel’s ability to successfully ramp up its 18A CPUs and highlighted the company’s lack of competitive AI accelerators. Bank of America research analyst Vivek Arya reduced the firm’s forecast for Intel, citing its weak guidance and inability to compete against rivals such as Nvidia, AMD, and Taiwan Semiconductor Manufacturing Company (TSMC).
On the other hand, AMD reported strong revenues of $5.8 billion for the second quarter and provided third-quarter guidance above expectations at $6.7 billion. Bank of America’s Arya praised AMD’s growth forecast, positioning the company as one of the top five growth companies in the semiconductor industry by 2025. Despite supply chain challenges, AMD successfully expanded its MI300 series accelerators.
UK-based chip design firm Arm reported positive results for the first quarter of its fiscal year 2025. However, its shares fell after issuing lighter guidance for the second quarter. Analysts at Jeffries noted that Arm has consistently exceeded market expectations in licensing, driven by the industry’s increasing demand for AI-related chips. Bank of America maintained its Buy rating for Arm, highlighting the company’s exposure to significant trends in the semiconductor industry, including cloud customers’ interest in designing custom chips.