The artificial intelligence bubble is showing signs of destabilizing. After already falling ahead of a quarterly report, Microsoft (MSFT) will fall again this morning.
Microsoft reported an EPS of $2.95 on revenue of $64.7 billion. Intelligence Cloud revenue is the key to its AI growth. While cloud revenue was $36.8 billion, Intelligence Cloud revenue was $28.5 billion. Investors should not believe that Microsoft, Alphabet (GOOG), and Apple (AAPL) will struggle while smaller firms thrive. The small cap index (IWM) has higher risks than the Nasdaq (QQQ).
Advanced Micro Devices (AMD) will open nearly 8% higher this morning. This is still below the $210 recent peak price in March 2024. The firm reported strong AI-related chip sales. CEO Lisa Su said that its AI business continued to accelerate. The company is well-positioned to deliver strong revenue growth in the second half of 2024.
In the restaurant sector, Starbucks (SBUX) may continue its rebound after reporting global comparable sales falling by 3%. Total revenue fell by 1.1% Y/Y to $9.1 billion. EPS was $0.93. International sales dropped by 7%. China dragged the performance lower, as sales fell by 14% on a same-store measure.
To fuel its growth, Starbucks opened 526 new stores in the quarter. The CEO said that the firm will focus on innovation and execution to enhance its capabilities.
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