Investors Worry Big Tech's AI Spending Is Eating Into Profits

Microsoft and Alphabet, the parent company of Google, report earnings after markets close this week. Investors are watching one thing closely: how much the companies' heavy spending on artificial intelligence is cutting into their profits.

What is happening

Shares of the two companies have moved in different directions since their last earnings reports. That suggests investors do not see the two firms the same way. Wall Street is also digging deeper into how AI spending weighs on the bottom line, which is the profit a company has left after paying its costs.

Why it matters to you

If you own stocks, or a retirement fund that holds them, these companies likely affect your returns. Microsoft and Alphabet are two of the biggest names in technology and major players in AI. When investors worry about their profits, the effect can reach far beyond tech traders.

It may also shape the prices of the tools you use. The companies are spending heavily on AI, and how they balance that cost against profit could influence what they charge.

What is not known yet

• The actual earnings results, which come after markets close this week.
• How much each company is spending on AI.
• Why the two stocks have moved apart since the last reports.
• Whether any prices for AI tools will change.

What happens next

The results will give the first clear look at how the AI bills are affecting each company. Investors will likely focus on how the companies describe that spending and what it means for profit going forward.