Earnings Preview:

Tomorrow is a big day for the U.S. stock market, with earnings reports from Microsoft, Google, Amazon, and Meta, the four major tech companies. This is the moment of truth for the AI sector.
The core focus of this round of major tech earnings is one thing: AI investment, whether it has already begun to translate into cash flow that can be explained as CapEx, and whether it is growing rapidly.
The earnings report coincides with a pullback in the U.S. stock market. Recently, this correction is essentially due to overbought conditions; the U.S. stock market has experienced a historic 18 consecutive days of gains; the indices are highly concentrated, with volatility in heavyweight stocks amplified; expectations have been relatively fully priced in, and any new variables will trigger profit-taking.
But AI demand is very strong and still accelerating, mainly driven by leading AI companies, big tech firms themselves, and some high-value clients; supply is constrained by physical factors such as GPUs, electricity, and data centers, with expansion clearly lagging; the supply-demand gap is huge and continues to widen.
High-end computing power remains tight, resources are concentrated on high-value clients, and AI-related revenue-generating capacity is improving.
However, the market has somewhat understood these points; what truly matters is whether demand can continue to penetrate supply constraints, translate into revenue, and then into cash flow.
Judgments should be based on three points:
First, whether revenue is continuously realized, looking at cloud business, AI revenue, and usage growth;
Second, whether growth is accelerating, looking at customer numbers, call volumes, and unit value improvements;
Third, whether cash flow is entering an upward trend, and whether the slope is becoming steeper—this is the most critical point.
These are currently more important indicators for the market than CapEx.
Because only with cash flow growth can CapEx continue to grow, creating a positive cycle. Conversely, the market will fall into spending fears again, as reflected in yesterday’s AMKR earnings report and stock price performance.
Disclaimer: I hold the securities mentioned in this article; my views are inevitably biased. The content is not investment advice. Stock investment carries significant risks, and entry should be made with extreme caution.