Wall Street grows weary of AI, but Big Tech is still all in

After Nvidia's (NVDA) second quarter earnings failed to excite Wall Street on the future of AI, top executives like HP Inc. (HPQ) CEO Enrique Lores and Salesforce (CRM) CEO Marc Benioff are still bullish on what artificial intelligence can add to their tech and platforms.

Brian Sozzi and Brad Smith sift through the opposing AI perspectives out from analysts and tech execs, highlighting the value large language models are projected to give Big Tech products.

Catch Yahoo Finance executive editor Brian Sozzi's latest interviews with HP CEO Enrique Lores and Salesforce CEO Marc Benioff following both companies' earnings on Wednesday.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Luke Carberry Mogan.

Video Transcript

Nvidia closed out a pretty mixed quarter for tech company earnings with a stumble as investors become wary of promises around A I growth.

Now, the analysts we spoke to around Nvidia's results saying they could see some weakness from here.

Take a listen at 6% of the index.

Tech has become 31% of the index and with communication services, 40% of the index, it's more top weighted than it was in 1999.

It's not going to hold what it's not that good of a news for is the rest of the technology complex.

A I has taken the oxygen out of the room for a lot of software companies.

We are in a lull if you will and the product cycle completely expected.

But a but a lull and we do believe we will see uh NVIDIA trade lower but still the executives of these big tech firms, they remain optimistic overall A IP CS we said before that we expected them to be 10% of the market in the second half and we think we are gonna be above that goal, proper demand remains strong and the anticipation for blackball is incredible.

So you're gonna be able to do all these things right inside our platform and that is exciting for our customers.

They get real value from A I now.

So the bottom line here, Sazi, I mean, we're getting a mixed picture of where A I hype is headed and that is the larger concern around any type of bursting that we might see in the future of an A I thematic bubble.

I will, I, I often very much agree with you a lot of time all the time, but I have to disagree a little bit, bro.

I think, I think A I is just doing fine.

But when I hear when I hop into a Dell earnings call and I hear the word uh things like accelerating A I server demand.

You know, you cut through all the hype and pop and circumstance around Nvidia's earnings, you hop on to their earnings call.

I heard the word accelerating demand for A I, I hear a strong backlog of demand for their next Blackwell chip.

You know, you saw a clip there from Sales Force, Co Mark Benioff.

He's getting ready to drop a whole bunch of new A I software at Dream Force in a couple of weeks called Agent Force.

I mean, the amount of A I that is about to come onto a sales force platform is very, very significant.

Even HP you saw up there with Co Enrique Lares when we talked, I mean, he is looking at how to deploy various A I levels or various A I applications inside of his own company to drive more efficiency.

So this is not just a one day trend, this is something with us.

It's accelerating and a lot of companies are going to make a lot of money for a long, long period of time.

Well, I don't think it's a one day trend at all, but I do think that you're going to have companies similar to those who were trying to figure out how they create a smartphone, figure out that, ok, their investments towards doing that did not work.

There are going to be companies who have said and had a lot of talk about generative A I but it has nothing to do with their business.

And so they're the ones who investors are going to hold to task.

They're the ones whose stock prices and the share price valuations are going to pull back and those who it's actually real for whether it be the applications that sit on top of the language learning models and the company that bring those to life and maybe even open source them and then those language learning models that sit on top of the chips, it's gonna be those in that stock or in that stack that are actually going to see their growth into those valuations lofty as they may be and forward looking as they may be that's going to be more sustained than a company that's just going out and say, hey, yeah, we're gonna a I, your peanut butter and jelly sandwich because that's not gonna happen.

Hey, if I hear waste management get on their earnings call and say, hey, we're creating a I, our trash bags or trash compactors.

I mean, that's just a red flag to me.

Get out of NVIDIA and go find another stuff.

Well, they're gonna make it seem logical for the investors out there.

Right.

They're gonna, they're gonna sugar coat it and say, hey, we're gonna have a, I in the trash trucks.

I'm bullish on a I powered trash cop.

Just machines.

I mean, they can pick up our trash quicker, get it out the door.

I mean, I, I waste management if you're watching this and I'm sure you are.

I mean, just go get these things to market.

What happens when it runs over your trash can?

Well, you know, hey, look, that's, uh, sometimes I just have no answers and that's one of them.