The stock price of all three companies fell after Meta increased its spending forecast for the year in its first-quarter earnings report, due in large part to its work on artificial intelligence. Microsoft and Alphabet—both competing against Meta in the generative AI space—report first-quarter results after markets close Thursday. (The Logic)

Talking point: Meta CEO Mark Zuckerberg told investors capital expenditures will continue increasing next year, as the company invests “significantly more” in AI without expectations for profits anytime soon. The warning overshadowed an otherwise glowing earnings report, in which Meta posted a 27 per cent jump in year-over-year revenue to US$36.5 billion and US$12.4 billion in net income for the first quarter. Meta and its AI rivals are in a tough spot with shareholders. While many investors want Big Tech firms to prioritize AI technology, they’re closely watching how much firms are spending and how they’ll make returns on those investments. Michael Arone, chief investment strategist at State Street Global Advisors, told Bloomberg investors want something to show for their support. “This is the show-me quarter for Microsoft and Alphabet in particular,” he said, “but also AI broadly.”