Why a Company Can Make Billions and Still Lose Money

Revenue is the money a company brings [music] in, but it is not the same thing as profit. Anthropic also reported a substantial net loss. Hey guys, Boston from Vectorvest here. If you've been watching [clears throat] your stock portfolio lately, especially your technology stocks, you've probably noticed things have been just a little bumpy. And this week could get even more interesting. We've got some pretty big names reporting their earnings this week. We've got Microsoft, Alphabet, which is Google's parent company, and Amazon. And investors want to know whether all this money that's being poured into the artificial intelligence is actually paying off. But something else just happened. Anthropic, the company behind Claude AI and one of Open AI's biggest competitors, just filed to go public, and they're reporting revenue growth of roughly 1,300% compared to the same six months last year. That's a pretty big number. So, today we're going to take a look at what's happening with AI, what these earnings reports could tell us, and three things that investors should be paying attention to right now. Look, we've all watched stocks take off, and when everything in our portfolio is green, that's awesome. But when those same stocks start moving in the other direction, that's when people start to get nervous. And between interest rates, earnings reports, and all this spending on artificial intelligence, there's a lot for investors to think about right now. But here's the thing. Just because a headline sounds scary doesn't necessarily mean the entire market is falling apart. And just because a company is involved in AI doesn't automatically make it a good investment either. So rather than guessing what's going to happen, let's take a look at some actual numbers. First, let's talk about these three big technology companies. Microsoft and Alphabet are scheduled to report their earnings on Wednesday, October 28th, after the market closes. And then Amazon follows up on Thursday, October 29th. Now, what makes these earning reports so important? Well, these companies have been spending enormous amounts of money building the infrastructure needed for artificial intelligence. And investors want to see whether that spending is actually turning into revenue in earnings. All right, so let's go ahead and start with Microsoft. Bring this over here. So we've got our earnings per share on the graph along with our RT on the graph. And of course, we have our price candlesticks along with our stock price. So now analysts are expecting Microsoft to report earnings around $4.71 per share compared with $4.13 in the same quarter of last year in 2025. So that's an expected increase of about 14%. So there's an expectation that earnings will continue growing, but we also want to see what happens with its cloud business, Azure, because that's a major part of Microsoft's AI story. Next, we've got Alphabet, which is Google's parent company. Analysts are expecting around $2.94 per share compared with the $2.87 a year ago. Now that's only about a 2 and 12% increase. So the question here is whether Alphabet can show investors that its cloud and AI businesses are still continuing to grow. And next we are going to have Amazon. So analysts are expecting around $21 per share compared with the $1.95 last year. That's roughly a 3% growth. Now, when most people think about Amazon, they think about ordering something online and having it show up at their front door. But Amazon also has Amazon Web Services or AWS for short, which is a major cloud computing business. And that's where a lot of the interest in AI comes in. So, to jump back here onto our stock viewer. Now, here's what I want you to remember. A company can report growing earnings and still see its stock price fall just like Netflix did. Why? Because investors aren't just looking at whether a company made money. They're looking at whether it made as much money as they expected it to. And that's why I want to take a look here at our stocks RT, which is our relative timing along with its earnings. Are earnings improving? And is the stock's price showing strength? Because those are two things that we can check inside of Vectorvest rather than just relying on a headline alone. So when we come over and check out our RT relative timing, we can see that Microsoft is sitting at a 1.07, which is based on a 0 to2 scale. However, we've got Alphabet and Amazon that are both below one. And we like to say here that above one is going to be considered favorable for that indicator and below one is going to be considered unfavorable. So right now, the only one that looks as if it's moving into an uptrend is going to be our Microsoft. Alphabet and Amazon are losing steam in their price trend. And when we come over to our earnings per share, we've got our numbers right here at 18.91 for Microsoft currently. We've got 14.90 for Alphabet and we've got 10.28 for Amazon. And then when we also take a quick look at our recommendation column, every stock within VectorVest, over the 10,000 different stocks that we're tracking have to have either a buy, hold, or sell recommendation strictly based on how the stock is behaving, not how the market is. So right now, Microsoft is at the top of our list here with a buy. And the other two have a hold because honestly, they're just not behaving in the way that we want them to. They could be correcting themselves or they could be having a little bit of trouble right now. But when you see a yellow H, that's a way to know, hey, something's going on here. I want to pay a little bit more attention to it. And this is something that you can check with any stock that you're interested in. You don't have to just take somebody's word for it when they say that a stock's doing great or maybe that it's coming down and crashing and burning. You can actually pull it up and look at the information yourself. And if you don't have Vectorve Vest yet, I've got a link down below in our description box where you can go ahead and take out a 30-day trial and follow along with me in VectorVest 7. But now, let's get back to what's happening with AI because there's another pretty interesting story that I want to show you. Now, let's talk about the really interesting news. Anthropic, again, the company behind Claude AI, just filed paperwork with the SEC to become a publicly traded company. They're proposing to trade on the NASDAQ under the ticker symbol A NT. But remember, filing for an IPO doesn't mean that you can just go out and buy the stock today. They still have to complete their offering process. Now, here's the part that actually caught my attention. So, for the first 6 months of 2025, Anthropic reported approximately 1.16 billion in revenue. And for the first 6 months of this year, 2026, they reported 16.2 29 billion. That's roughly a,300% increase in just one year. And that tells us something pretty important. There is clearly a tremendous amount of money being spent on artificial intelligence. But there's another side to this story. Revenue is the money a company brings in, but it is not the same thing as profit. Anthropic also reported a substantial net loss. So even though the company's growing very quickly, investors still need to ask whether that growth can eventually turn into sustainable profits. And that's an important decision. Just because AI is growing doesn't mean that every AI related stock is going to keep going up. And since Enthropic isn't publicly traded yet, we can't even evaluate it as ENT in VectorVest the same way that we can Microsoft, Alphabet, Amazon. But we can continue watching the publicly traded companies involved in this AI business. So we can use the information that we already have to see which stocks are showing strength and which ones may be struggling. Now, here's something else I think is pretty interesting. When we talk about artificial intelligence, most people immediately think about technology stocks, right? You've got Microsoft Nvidia Amazon companies like that. But have you ever thought about what all these AI data centers actually need to operate? Electricity and a lot of it. According to the International Energy Agency, data centers worldwide used approximately 485 terowatt hours of electricity in 2025. and they're projecting that number could reach around 950 terowatt hours by 2030. That's nearly doubled. So, while everybody's watching the technology companies, there's another group of businesses worth paying attention to. The companies helping supply the electricity and infrastructure needed to keep those data centers running. Natural gas is one of the sources that power along with renewables, nuclear, and other electricity sources. I've gone ahead and open up our second watch list, which is going to be our AI resources is what I've called it. And as you can see, I'm not saying that these stocks are automatically good buys just because AI needs electricity, but they do give us another area of the market to investigate. Looking at these three stocks, I can go ahead and extend that. So, we've got the Southern Company, SO, we've got GEV for short, and Williams cost WMBB. So when we come over and look at their RT scores, we have so and WMBB are both above one. Remember above one is favorable for our stocks trend, but we have GEV a little bit below one. So technically it's considered unfavorable in the stocks RT. But when we come looking at our EPS, so is sitting at 4.80. GEV is sitting nicely at 2303 and then WMBB coming in at the rear for 2.55. And while numbers can give us a pretty good idea of what we're at, let's take a look at our graphs and see what they have going on here. So, taking a look here at SO, we've got our earnings that have been moving up nice and smoothly. And our RT, although it did come below one, we are now bouncing back upwards into positive territory. And this is the one that's sitting at the 1.20. So earnings have been moving up. The price trend, as you can see, does come down. They did have a downward fall, but they are having a nice run up. Let's take a look at our next stock, GEV. So, we've got our price going a little bit sideways, but it is coming down. And again, the earnings are looking beautiful. Nice and steady increase over the past six months, I'd say, roughly five, six months. And then look at the RT. It's been pretty choppy and the price is going to reflect a similar pattern. It's going to go up. It comes down into unfavorable territory. It flirted with that 1.0 line which is our gold bar running across the RT indicator right here and then it did come down and we do know that that is a stock that was sitting at 0.72. So our price trend is not very strong at this time. And lastly WB. So the price has just been going sideways in a channel up down up down up down. The earnings has been coming up slowly a little bit more of harder breaks but it is coming up and the RT has been flirting since about June May the end of May all the way to the right present day flirting with that 1.0 line. So although we're sitting at 1.04 it's not promising anything amazing right now with the stock's strength in price. So something to keep our eye on going forward. So we can look at their earnings and their relative timing and we can even take a look really quickly at their recommendations. As I had mentioned before, every stock gets a buy, hold, or sell recommendation. Currently, ESO is doing what we want to see it do. It's sitting at a buy recommendation. Looking at GEV, it's not acting the way we want it to. So currently, because your price is below our stock price, which is that final line in the sand, this stock is getting a sell recommendation and our hold is going to land on the WMBB. Just keep in mind if technology stocks are struggling, that doesn't necessarily mean that every other area in the market is struggling right along with them. And that's why it's important to look beyond just one group of stocks. So what's the biggest mistake that investors can make during a week like this? making a decision based entirely on fear. Now, I'm not saying that you should never sell a stock that's falling. You absolutely need to know when it's time to get out of your positions. But there is a difference between following your trading plan and panic selling just because you saw some scary headline. And the same goes for when you're buying. Just because a stock has dropped in price does not automatically mean it's a bargain. Before making that decision, you need to look at the market, look at the stock, and make sure that conditions support what you are trying to do. That's exactly why I like to use VectorVest. It gives me a way to look at all this information without having to guess. Now, my question for you, do you think that AI stocks still have room to grow, or do you think that we're starting to see a bubble? Let me know what you think in the comments below. And if you've enjoyed this video, I'd really appreciate it if you go ahead and hit that like button. It helps other investors find these videos, too. And don't forget to go ahead and subscribe to our channel if you haven't yet. That way, you don't miss the next video when it's released. And that's all I've got for you today. So, I will see you guys in the next video. Bye for now. >> Don't waste your time trying to analyze market trends. That's what VectorVest is for. Our market timing [music] indicators let you know when to buy and sell so you can ride the rallies and avoid downturns. Vectorvest powerful tools give you the foresight you need to buy low and sell high. And while everyone else is looking at the hot stock of the day, Vectorvest digs [music] deep to find the real money makers, the ones you can win big with. Timing is everything. So make the smart investing choice today and head to vectorvest.com for your risk-free trial. >> [music]