Investors Reward Returns, Punish Heavy AI Spending in Earnings Season

Equity investors are learning that not all AI trades are equal this earnings season. Profits at S&P 500 and Stoxx Europe 600 firms are tracking one of the best quarterly increases in years, but Meta and Alphabet were penalized for heavy AI spending, while Microsoft was rewarded for preserving cash. The S&P 500 is flat; the Stoxx 600 is up 1.3%.