《Mid-year Big Exam for AI Monetization Logic》

At around midnight on the 23rd, Google is about to release its latest earnings report. This report is not only about Google itself; in essence, it is the mid-year big exam for the entire market’s “AI monetization logic,” and a sentiment barometer for recent U.S. stocks, and even for macro risk assets as a whole.

Current market pricing versus expectations

The consensus expectations from Wall Street are already fully dialed in: total revenue of about $116.8 billion (year-over-year +21%), with an expected EPS of $2.89 per share. But this is just the surface. The real deciding factor for life or death is Google Cloud. The market is currently extremely eager for it to deliver the astonishing growth rate of up to over 60% for its cloud business, to prove that the heavy prior investments have not been wasted.

The substantive impact on trading is not how impressive the report looks, but how large funds will reassess their risk appetite based on it. There are two angles:

1、If the earnings report beats expectations across the board and guidance is strong
This is the script for stabilizing the whole picture. As long as Google proves that AI investment can be converted into real money revenue, this “pillar” can hold up the entire hardware and semiconductor industry chain (NVIDIA, TSMC). Once Nasdaq bulls’ sentiment is stabilized, this liquidity tailwind will directly spill over, providing strong support for overall AI U.S. stocks.

2、If the earnings report falls short of expectations, or if Capex (capital expenditure) stays high but revenue guidance is weak
This is the biggest tail risk in the current market. With the AI main narrative extremely crowded, the market’s tolerance is very low. As long as the report shows even a hint of “spending heavily, hard to monetize,” it will immediately trigger panic among funds about AI investment returns. This panic will lead Nasdaq to lead in killing valuations, and then cause cross-asset indiscriminate deleveraging (De-risking).

What should we do in operations and response?

1. I suggest not going long on the left side; press down on exposure before the earnings report.

2. Keep a close eye on the forward-looking indicator: If the earnings report triggers a big drop that is worse than expected, don’t rush to buy Google. First, look at the follow-through strength in the semiconductor sector—SMH. If even the people selling shovels get knocked down too, it means the macro main narrative is wobbling, and exposure must be decisively reduced.

The market is too full right now. As long as the earnings report isn’t good enough, it becomes a negative catalyst. Keep your ammunition and wait for direction confirmation.

$GOOG.US
{stock_us}(GOOG.US)