Before Big Tech earnings begin, here are some of my thoughts on what to expect:

1. We might see a negative reaction from investors following earnings because $Meta Platforms (META.US)$ , $Microsoft (MSFT.US)$ , $Amazon (AMZN.US)$ & $Alphabet-A (GOOGL.US)$ will all have to increase their CapEx quite significantly again. The reason is the release of OpenAI's o1 in mid-Q3 and what it means for Inference compute. All LLM building companies will have to front-load a lot of CapEx that was before planned to be more gradual (in line with product releases and limited user access). The reason is that now Inference is also a scaling paradigm for LLMs.

2. I expect good results from $Meta Platforms (META.US)$ on the user, revenue, and earnings front, but $Meta Platforms (META.US)$ will, in my opinion, raise CapEx more than is consensus as Mark likes to invest in the long term even if it means "short-term pain." With the stock close to ATH levels, he might feel he has even more room to do so.

3. I expect strong cloud results for all three hyperscalers: $Microsoft (MSFT.US)$ , $Alphabet-A (GOOGL.US)$ , and $Amazon (AMZN.US)$ . I think AWS might be the most positive standout on this earnings because of the broader adoption and development of GenAI in the quarter (outside of OpenAI, where Azure gets most of its GenAI revenue). All three will raise CapEx ( $Alphabet-A (GOOGL.US)$ the least because of its most mature TPU offering ). Still, the market reaction will probably hinge on the relationship between cloud acceleration (rev growth) vs CapEx increase. Those that show acceleration from GenAI workloads will do the best.