AI ETFs Set to Gain on Robust Meta, Microsoft Earnings

Meta Platforms META and Microsoft MSFT reported robust quarterly earnings, boosting investor confidence in the artificial intelligence (AI) sector. The dual earnings underscore that strong demand for AI is helping both companies navigate economic uncertainty driven by tariffs. Both tech giants surpassed the Zacks Consensus Estimate, leading to a surge in their stock prices and spreading huge optimism into AI-related stocks across the market.

Following the reports, NVIDIA (NVDA) and Advanced Micro Devices (AMD) rose 2.8% and 2%, respectively, while Amazon (AMZN) jumped 3% in after-hours trading. Alphabet (GOOGL) also saw a modest increase of more than 1%. 

Investors may tap the opportunity with AI ETFs like Global X Artificial Intelligence & Technology ETF AIQ, Global X Robotics & Artificial Intelligence ETF BOTZ, ROBO Global Robotics & Automation Index ETF ROBO, ARK Autonomous Technology & Robotics ETF ARKQ, First Trust Nasdaq Artificial Intelligence and Robotics ETF ROBT, ROBO Global Artificial Intelligence ETF THNQ and Amplify AI Powered Equity ETF AIEQ.

AI Powers Meta Platforms’ Growth

Meta Platforms reported earnings per share of $6.43, which topped the Zacks Consensus Estimate of $5.22 and increased 37% from the year-ago quarter. Revenues grew 16% year over year to $42.3 billion and came above the estimated $41.22 billion (read: Can Q1 Earnings Inject Fresh Life Into Magnificent 7 ETFs?). 

In a strategic move, Meta raised its capital expenditure guidance to $64-$72 billion from the previous projection of $60-$65 billion for 2025. The new guidance “reflects additional data center investments to support artificial intelligence efforts as well as an increase in the expected cost of infrastructure hardware.”

Cloud and AI Fuel Microsoft Earnings

Microsoft reported earnings per share of $3.43, beating the Zacks Consensus Estimate of $3.20 and improving 18% from the year-ago earnings. Revenues grew 13% year over year to $70.07 billion, edging past the consensus estimate of $68.38 billion. Strong demand for Cloud services and AI infrastructure drove the performance.

Microsoft is one of the biggest beneficiaries of the AI boom. It has been pouring billions into building its AI infrastructure and expanding its data-center footprint. During a call with analysts, chief financial officer Amy Hood said Azure will grow as much as 35%, adjusting for currency fluctuations, during the ongoing quarter.

AI to See Unprecedented Growth

The latest earnings underscore the resilience and growth potential of AI-focused companies. While the significant capital expenditures raise questions about short-term profitability, the long-term potential of AI technologies presents substantial opportunities for growth. 

The global AI market is undergoing remarkable growth, fueled by key drivers such as the widespread adoption of digital technologies, increasing awareness of AI’s potential, and the rising demand for convenient online services. This rapid expansion is further propelled by major advancements in AI robotics, autonomous systems, sensor technology, computer vision, machine learning, natural language processing and generative AI (read: A Glimpse at Trump's 100 Days in Office: ETF Winners & Losers).

A new UN Trade and Development report projects the global AI market will soar from $189 billion in 2023 to $4.8 trillion by 2033, representing a 25-fold increase in just a decade. Per Grand View Research, the global AI market is expected to witness a compound annual growth rate of 35.9% from 2025 to 2030 to reach $1,811.75 billion by 2030. Statista projects that the AI market will reach $244.22 billion in 2025 and $1.01 trillion by 2031 at a CAGR (2025-2031) of 26.60%.

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This article originally published on Zacks Investment Research (zacks.com).

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