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美股风云再起?“七姐妹”财报密集来袭,AI资本支出成关注焦点

A new chapter in the US stock market? The financial reports of the 'Seven Sisters' are coming out in succession, with a focus on AI capital expenditures.

wallstreetcn ·  Jul 29 05:32

After Tesla and Alphabet's financial report last week, tech stocks experienced a downturn. This week, the market is trembling as Mag 7, which includes Google, Apple, Meta, and Microsoft, release their financial reports.

This week, the financial reports of Mag 7 are making a big impact. $Amazon (AMZN.US)$,$Apple (AAPL.US)$,$Meta Platforms (META.US)$And.$Microsoft (MSFT.US)$Due to the poor performance of last week's financial report of Mag 7, which includes Tesla and Alphabet, the market sentiment has become nervous, and if the financial performance of the other Mag 7 members is poor this week, it may worsen the downturn of the US stock market.

Mag 7 continues to be the biggest contributor to the profit growth of S&P 500. $Tesla (TSLA.US)$And.$Alphabet-A (GOOGL.US)$The high cost of AI investment creates a greater risk when there is insufficient investment. Google may have invested too much in its AI infrastructure, such as by purchasing data center and GPU chips, which could be used for other purposes even if the AI hype slows down. For us, the risk of insufficient investment is much greater than the risk of excessive investment.

Microsoft will release its financial report on Tuesday, Meta will release after the close on Wednesday, while Apple and Amazon will release after the close on Thursday.

Mag 7 continues to be the largest contributor to profit growth in S&P 500.

Bank of America expects that more than one-third of the profits of the S&P 500 index will be announced this week, mainly due to the four technology giants accounting for nearly 20% of the index's weight.

The second quarter profit of Mag 7 will increase by 30% year-on-year, and the two companies that will announce financial reports this week, Meta and Amazon, are expected to become one of the biggest contributors to profit growth of the S&P 500 index.

However, Alphabet's financial report last week showed that strong profit growth may not be enough for Wall Street.

Alphabet's profit exceeded expectations last week, but Wall Street was not convinced.

Compared with profits, investors will pay more attention to the capital expenditure of Microsoft and Amazon in this financial report.

Alphabet's financial report showed that second-quarter profits increased by 28%, exceeding expectations. However, the huge investment of Google in AI infrastructure almost doubled capital expenditures, causing market concerns and leading to a sharp drop in Alphabet's stock price.

"Over the long term, I don’t think we will regret having made these investments," said Alphabet CEO Pichai.

AI is expensive, but the risk of insufficient investment is greater. Google may have invested too much in AI infrastructure, including buying GPUs from NVIDIA. Even if the AI boom slows down, the data centers and computer chips purchased by the company can be used for other purposes. For us, the risk of insufficient investment is much greater than the risk of overinvestment. $NVIDIA (NVDA.US)$Google may invest too much in AI infrastructure, including purchasing NVIDIA's GPUs. Even if the hype around AI dies down, the data centers and computer chips they bought can be used for other purposes. The risk of not investing enough is much greater than the risk of investing too much.

However, besides profits, the AI-related expenses of Meta and Amazon in this financial report will be the focus of the market, as questions arise regarding the return on excessive investment in AI.

CFRA analyst Angelo Zino said that the capital expenditure rate of technology giants is indeed increasing, but the increase in capital expenditure should not be seen as a disappointing result, as it is healthier than increasing operating expenses.

Bank of America analysts pointed out that the upward adjustment of legal and capital expenditures in Meta's second quarter is still a risk.

Will the rotation of the US stock market continue?

The timing of the tech giants' new financial reports coincides with the downturn of the US stock market. Investors have been fleeing from technology stocks and pouring into small-cap stocks, as Wall Street expects high-risk assets such as small-cap stocks to benefit from the upcoming interest rate cut.

Wedbush analyst believes that there is no need to worry too much about the increase in capital expenditures of technology giants, and that the sell-off of technology stocks will be short-lived as Wall Street better digests the performance of the entire technology industry.

Angelo Zino also added that although there may still be further rotation of the US stock market, the pullback of technology stocks may be temporary, which may bring "a very good opportunity for long-term investors."

Editor/ping

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