Big tech AI earnings face test as Nasdaq 100 nears correction

Big tech AI earnings are arriving under pressure as investors prepare for reports from Meta, Microsoft and Amazon while the Nasdaq 100 trades close to correction territory, according to The New York Times’ DealBook newsletter. Brent crude, the international oil benchmark, rose more than 5 percent to about $88.50 a barrel after the United States and Saudi Arabia said they carried out coordinated strikes on Iranian-backed militias in Iraq, adding geopolitical risk to an already unsettled market.

The earnings calendar puts Microsoft and Meta in focus later Wednesday, with Amazon due to report Thursday, DealBook reported. The reports are being watched as gauges of whether large technology companies can show that artificial intelligence investment is translating into stronger financial performance.

Technology shares have been under strain as investors weigh several shocks at once: renewed fighting involving the United States and Iran, a closely watched Federal Reserve interest-rate vote and a broader sell-off in tech stocks, according to DealBook. The Nasdaq 100’s proximity to correction territory signals that the decline in large technology names has become a market-wide concern rather than a company-specific issue.

Why are investors watching big tech AI earnings?

Investors are looking for evidence that artificial intelligence is generating measurable returns after a period in which major technology companies and their suppliers have benefited from expectations of rapid AI adoption. Earnings reports can test that thesis because they show revenue, margins and management commentary at the companies most closely associated with the build-out.

Meta, Microsoft and Amazon sit at different points in the AI economy. Microsoft is closely watched because of its role in enterprise software and cloud computing. Meta is under scrutiny as investors assess its AI plans and broader technology spending. Amazon’s report will be read partly through the performance of its cloud business, a central channel for corporate computing demand.

DealBook also pointed to pressure in Asia, where South Korea’s Kospi index continued to sell off and SK Hynix shares fell again. SK Hynix, whose memory chips are used in AI infrastructure as well as autos and consumer technology, reported a record quarterly operating profit margin on Wednesday, according to The New York Times. Even so, the company’s shares have fallen by half over the past month, DealBook reported.

That reaction shows the gap between strong reported operating metrics and elevated market expectations. In a sector priced for rapid AI-driven growth, record profitability at a key supplier may still fail to support shares if investors judge the outlook, valuation or pace of demand to be insufficient.

The oil move adds another variable for global investors. Higher crude prices can feed concerns about inflation and corporate costs, while military action in the Middle East can push capital toward safer assets. DealBook said the strikes ended a four-day pause in fighting, intensifying a geopolitical backdrop that markets were already monitoring.

The Federal Reserve vote adds a policy dimension. Interest-rate decisions affect the discount rate used to value future corporate profits, which can be especially relevant for growth stocks whose valuations depend heavily on earnings expected in later years. For Big Tech, the immediate test is whether this week’s earnings can give investors enough concrete data to separate AI revenue prospects from market enthusiasm.

This story draws on original reporting from NYT DealBook.