Cloud computing growth has slowed significantly for Microsoft Corp., Amazon.com Inc., and Alphabet Inc., raising concerns about their earnings momentum. The AI boom is still in its early stages, but massive investment costs, power constraints, and increasing competition may delay profitability.
Nvidia Corp.’s report on weaker-than-expected earnings could trigger a broad selloff in AI and cloud-related stocks. Analysts fear that if these companies fail to deliver, their AI businesses may never gain traction.
The saturation point for cloud services has been reached, with most big clients already using either AWS or Azure. Small clients no longer provide significant growth, making it challenging for companies like Google to boost earnings through AI investments.
Analysts predict that cloud computing will continue to decline in attractiveness to investors, causing billions of dollars invested in AI to lose value. Without a viable cloud business, AI is unlikely to succeed, and the market may soon face a correction.
Investors should exercise caution when considering these companies’ stock values, as their business models are under strain. The sudden decline of any one of these stocks could lead to a broader market downturn, making it essential to assess their financial health before investing.
Source: https://247wallst.com/investing/2025/02/12/amd-stock-is-stuck-between-cloud-and-artificial-intelligence-and-this-time-buy-the-dip-wont-work