Jin Shi Shu Ju·2025-10-27 10:02Core Viewpoint - This week is critical for the U.S. stock market, potentially determining its direction for the remainder of the year, with major tech companies set to report earnings [2][3]. Group 1: Earnings Reports - Five major companies—Microsoft, Alphabet, Meta, Amazon, and Apple—representing about a quarter of the S&P 500 index, will release their earnings reports this week, focusing on their performance in cloud computing, e-commerce, digital advertising, and AI outlook [3]. - So far, over a quarter of S&P 500 companies have reported earnings, with approximately 85% exceeding Wall Street expectations, marking the best performance in four years [3]. Group 2: Capital Expenditure and AI - Microsoft, Alphabet, Amazon, and Meta are expected to spend a total of $360 billion on capital expenditures this fiscal year, primarily related to AI, with projections for next year rising to nearly $420 billion [4]. - The surge in AI-related spending has positively impacted various sectors, including semiconductor manufacturing and utilities, with Nvidia being a significant beneficiary [4]. Group 3: Revenue Growth and Investor Sentiment - Revenue growth from AI services is most pronounced in the cloud computing divisions of Amazon, Microsoft, and Alphabet, making these areas focal points in their earnings reports [5]. - Despite substantial capital expenditures, the revenue generated from AI remains low, yet investors are optimistic that these investments will lead to market dominance as new AI applications emerge [5]. - The anticipated profit growth for the "Tech Seven" in Q3 is projected at 14%, down from 27% in Q2, indicating a potential slowdown in earnings growth [5]. Group 4: Market Expectations - Historically, large tech companies have exceeded Wall Street expectations, which many investors rely on as a significant driver for the stock market [6]. - The potential for upward revisions in expectations is viewed as a positive sign for the current earnings season [6].