#美股财报季 The Market Is No Longer Paying for AI Spending: Earnings from the Three Cloud Giants + the Fed Will Decide Whether the Rebound Continues or the Market Plunges Further
If you’ve been following U.S. stocks lately, you’ve probably noticed a change: over the past two years, anything associated with AI would go up almost without fail. But starting this week, investors have become more selective—AI stories alone are no longer enough; companies need to deliver results.
The immediate trigger was last week’s market action. The Nasdaq fell for the week, its worst weekly performance since June this year, and even saw its biggest single-day drop intraday.
The reason is straightforward: earnings from Meta and semiconductor equipment maker Lam Research fell short of expectations, prompting the market to seriously question for the first time when the billions these major companies are pouring into AI will actually pay off. And this week is when a wave of earnings reports will come in.
Why This Week Is So Important
Several major events are converging:
After the market closes on Wednesday (10/28), Microsoft and Google parent Alphabet will report earnings on the same day;
In the early hours of Thursday (10/29), the Fed will announce its interest rate decision, and Amazon will report earnings that evening;
The U.S. September PCE inflation data will also be released on Thursday.
In other words, guidance from the three major cloud providers, the Fed’s stance, and inflation data will all land within two days. They will answer the same question: Is the recent pullback in U.S. stocks a normal correction, or the start of a much steeper decline?
A Few Numbers to Watch
Wall Street currently expects major cloud providers to spend around $800 billion on AI this year. The money has already been invested; now the market wants to see returns.
As for the Fed, it is widely expected to hold rates steady in October, keeping them at 3.75%–4.00%. But markets have already priced in about a 72%–80% chance of a rate hike in December. So a hold this time doesn’t mean policy will be more accommodative going forward.
One less-noticed point: data shows Wall Street’s overall leverage ratio has risen to 214%. Leverage has been quietly building up as markets have heated up, and if the tide turns, deleveraging itself could amplify volatility.
There is good news on the other hand: S&P 500 companies that have reported third-quarter results so far are still posting year-over-year earnings growth of around 30%. Fundamentals haven’t broken down; expectations simply ran too far ahead and now need to be validated by results.
So the key thing to watch this week isn’t whether stocks rise or fall, but whether companies’ guidance on spending and signals on returns line up.
Key Times This Week
Microsoft, Google: After the market closes on 10/28; watch capital spending and signs of returns from cloud businesses;
Amazon: 10/29; watch retail and AWS, as well as its stance on capital spending;
Fed: Early hours of 10/29; a hold is largely expected, so focus on the wording around December; PCE: 10/29; watch whether inflation adds to rate hike expectations; if volatility picks up, watch for ripple effects from highly leveraged positions.
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