AI Earnings Miss Reignites Cash-Burn Concerns
The AI rally that led this bull market has hit turbulence, starting with earnings from Google parent Alphabet 於10月28日週三盤後. The company's third-quarter revenue and profit came in below expectations, with free cash flow reaching 負90.7億美元, far worse than market expectations, and it guided that next-year capital expenditure will be higher than this year's 1950億至2050億美元, estimated to exceed 3000億美元. The next day 週四盤後, Amazon followed a very similar script, and the reports from the two major CSP giants reignited investor concerns that AI is burning too much cash.
Intel Plunge Drags Philadelphia Semiconductor Index Lower
After reporting earnings, Intel shares collapsed 28.58% 週五, dragging the Philadelphia Semiconductor Index down 7.20%. Hit by slowing PC business, Intel's current-quarter outlook missed expectations, making it a victim of surging memory prices and shortages of other components. As the biggest winner of the AI CPU boom, Intel also faces the problem of burning cash too fast. In a cash-is-king atmosphere, CFO Zinsner said the company is building up manufacturing capacity and is unlikely to achieve positive cash flow 今年, while it remains on track to spend 200億美元 in capital expenditure 今年, with capital expenditure set to increase sharply in 2027年 as more chipmaking equipment arrives.
US Stocks Close Lower on Worries Over AI Funding and Returns
Dragged down by AI-related and technology shares, 週五 the S&P 500 closed down 1.82% and the Nasdaq fell 2.86%. The quarterly reports have left investors worried about funding and returns on sky-high AI investment, which is at the core of this bull run. Mara Norton, chief investment strategist at retirement and wealth services firm Empower, said equities looked unsettled, with concerns indeed coming from AI worries, and such concerns seem likely to persist, if not worsen. Chris Galipeau, chief market strategist at Franklin Templeton Institute, said the bar for earnings performance is very high, and if you fail to meet or clear that bar, you are in big trouble.
Three Tests Next Week Led by Apple Earnings
The market is still digesting earnings released 本週, and with Apple, AMD, Palantir and other large technology and AI-related stocks reporting 下週, doubts about AI spending may persist and the market may still face tests. Apple will report 美東時間週一盤後, and the iPhone maker is up about 27% 今年以來. Semiconductor giants AMD and Qualcomm, as well as big-data analytics and AI software giant Palantir, will also report 下週, offering more perspective on the AI trade. More than 100 S&P 500 constituents will report 下週, including McDonald's, Amgen and oil giant ConocoPhillips. The US midterm elections 下週 may decide the direction of future AI regulation and could also affect market moves. The US October nonfarm payrolls report, due 下週五, will provide more clues on the US economy and will be critical for how the Federal Reserve decides on interest rates.