Financial Media on November 1st (Editor Zhou Ziyi) Nowadays, investors' expectations for large technology companies in the US stocks have been stretched so high that even exceeding expected profits is no longer enough to satisfy them. The financial reports season of US tech giants kicked off this week, and surprisingly, although the financial performance is shining, the market reaction is brutal.

microsoft is a good example. After the US stock market closed on Wednesday (October 3), Microsoft announced its performance report for the first quarter of the fiscal year 2025 (the third quarter of 2024), easily exceeding Wall Street's expectations, with quarterly revenue surpassing expectations by 1 billion US dollars and a net income growth of 11% compared to the same period last year.

However, its stock price fell by 6.05% on Thursday, as the company's outlook for the second quarter disappointed investors. The company informed investors that cloud revenue growth would slow, profit margins would decline, and expenses would increase. This caused Microsoft's stock price to suffer its worst day since October 26, 2022.

The stock price situations of Meta, apple, and Alphabet are also similar.

Meta announced third-quarter revenues and earnings that exceeded expectations and even forecast fourth-quarter revenues to be between 45 billion and 48 billion US dollars, with an expected midpoint of 46.5 billion US dollars, slightly better than analysts' expectations of 46.31 billion US dollars. However, its stock price fell by 4.09% on Thursday.

apple also disclosed double-than-expected revenue and adjusted earnings per share in its quarterly report. However, apple's stock price 'collapsed' on Thursday, closing down by 1.82% on Thursday.

Alphabet, Google's parent company, also exceeded expectations in third-quarter revenue and profits announced after the close on Tuesday, with the company excitedly stating that its artificial intelligence investment 'is paying off'. After rising nearly 3% on Wednesday, its stock price fell by 1.9% on Thursday.

The losses in stock prices of these large technology companies also dragged down the Nasdaq Composite Index, which fell by 2.76% on Thursday; moreover, the S&P 500 Index, weighted by these large enterprises, also plummeted by 1.86% on the same day.

Both of these major US stock indices experienced their worst day since September 3, with the Dow Jones Industrial Average falling by 0.9%.

Was it an unexpected outcome or a technical pullback?

By analyzing the latest performance of tech giants and their stock price reactions, numerous Wall Street professionals have provided their own opinions.

Ross Mayfield, investment strategist at Baird Private Wealth Management, stated, "I believe that currently, the enthusiasm and potential of artificial intelligence are not sufficient to meet market expectations. In fact, these companies have not fully achieved the growth expected by the market."

However, some analysts remain optimistic about the large technology companies driving the stock market higher.

Solita Marcelli, Chief Information Officer for the Americas at UBS Group's Global Wealth Management, wrote in a report, "The three tech giants (Microsoft, Alphabet, and Meta) reported continued growth in artificial intelligence-related capital expenditures, supporting positive structural trends."

Similarly, the Chief Market Analyst at Piper SandlerTechnical AnalysisIn a letter to clients, analyst Craig Johnson wrote, "Overall technical evidence still remains constructive, even though there have been recent pullbacks or moderate profit-taking, the main trend of the major indices is upward."

Undoubtedly, this has brought huge burdens to large technology companies. Investors and analysts not only expect these companies to outperform expectations, but also hope that large-cap companies will continue to drive the market in the future, which depends more on the companies' growth prospects rather than just profits.

Fundamentally, large technology companies need to meet people's expectations for current performance as well as expectations for future prospects more than any other industry.