Global investors are 迎来 another extremely critical earnings season for major American technology companies. These tech giants will intensively disclose their earnings reports this week, with stock prices near historical highs and valuations at record levels. A key difference this time is that the quarterly profit growth of the so-called "seven major tech giants" in the U.S. stock market is expected to be the slowest in nearly two years, and many Wall Street analysts have indicated that the threshold for exceeding expectations has "increased." Since the end of 2022, the epic market capitalization expansion of $15 trillion led by the seven tech giants has undoubtedly faced severe tests. Moreover, it is worth noting that as the "four giants" of the U.S. stock market announce their earnings this week, it coincides with the global "low-cost computing power storm" led by DeepSeek. Investors are beginning to question whether the American tech giants' seemingly "irrational" fervor for AI spending is reasonable. The AI engineering team from China's DeepSeek has created the DeepSeek R1, which dominated the U.S. trending searches last week, and the DeepSeek app topped the free app download charts in both the Chinese and U.S. regions of the Apple App Store on Monday, surpassing ChatGPT in the U.S. download rankings. The emergence of DeepSeek R1 signifies a significant reduction in AI training and inference costs, achieving comparable performance to OpenAI's O1 with an extremely low investment cost of less than $6 million and 2048 chips that perform far below the H100 and Blackwell's H800. The reason for DeepSeek's dominance in trending searches in the U.S. and globally stems from the official release of its inference model DeepSeek-R1 on January 20. This model has been confirmed by several tech industry leaders last week to perform well in key areas such as mathematics, programming, and reasoning, capable of "arm wrestling" with OpenAI's so-called "strongest reasoning model in human history," O1, while its API call costs are 90%-95% lower. DeepSeek's low cost + ultra-high efficiency + comprehensive performance that rivals O1 comes from applying "extreme engineering" and "fine-tuning" to every aspect of the large model training process. For instance, efficient training and data compression strategies guided by extreme engineering, along with multi-layer attention (MLA), FP8 mixed precision, DualPipe parallel communication, and expert gating (MoE) load balancing, maximize hardware resource utilization during the training phase, reduce "unnecessary computing power waste," and implement innovative AI training measures such as "reinforcement learning + distillation + specialized data optimization." In short, DeepSeek continuously reduces the "ineffective consumption" of general computing power through "extreme engineering + parallel optimization + precise data screening + accurate post-training," concentrating resources on the core modules (attention heads, key operators, RL/distillation fine-tuning, etc.) that most enhance model performance. This demonstrates how "extreme engineering + post-training distillation + professional data integration + focused reinforcement" can approach or even surpass the performance of mainstream industry large models with limited GPU resources, posing a strong challenge to the traditional "massive spending" model Therefore, DeepSeek maximizes the potential of hardware and algorithms—this stands in stark contrast to the "extensive money-burning" approach of American tech giants for a long time. As a result, global investors are eagerly hoping that the massive investments in AI by the "four giants" of the U.S. stock market can achieve positive revenue and profit scales, thereby significantly exceeding overall revenue and profit expectations. Otherwise, they will view this "irrational" AI spending, which fails to bring any substantial profits despite large investments, as completely damaging the profits attributable to the company's common stock, leading to a wave of sell-offs. Performance of the Four Giants: The "Hope of the Entire Village" for U.S. Stocks The "four giants" of the U.S. stock market—Apple (AAPL.US), Microsoft (MSFT.US), Meta (META.US), and Tesla (TSLA.US)—will announce their earnings this week. Their actual performance is crucial for the U.S. stock market and even the global stock market trends, as these tech giants account for nearly 40% of the S&P 500 index and the Nasdaq Composite index. Their performance is closely related to global tech stock investors' "faith and positive outlook on artificial intelligence." If their performance generally falls short of market expectations, it may lead investors to question the revenue and profit prospects associated with AI, potentially triggering a global tech stock crash similar to last summer. The "seven major tech giants" of the U.S. stock market, known as the "Magnificent Seven," include: Apple, Microsoft, Google, Tesla, NVIDIA, Amazon, and Meta Platforms. They are the core driving force behind the S&P 500 index reaching new highs. Looking at the entire U.S. stock market, the "seven major tech giants" have been the leading force since 2023, attracting global capital with strong revenue from AI investments, solid fundamentals, sustained strong free cash flow reserves over the years, and expanding stock buyback programs. Google (GOOGL.US), NVIDIA (NVDA.US), and Amazon (AMZN.US) will announce their earnings in February. The stocks of large tech companies in the U.S. stock market, such as Google, NVIDIA, Meta, and Microsoft, have surged significantly since the beginning of the year, especially amid risk appetite and investors' high revenue and profit expectations from these companies spending billions of dollars on developing AI services. The stock performance of these tech giants has outperformed the broader market. However, the earnings season starting this week may awaken bullish investors: although the profits of the so-called "seven giants" continue to grow and far exceed other segments of the U.S. stock market, Wall Street expects their growth rate to slow significantly compared to previous quarters. Ultimately, under the pressure of the base effect and the continued large investments in AI with still unclear profit prospects, these tech giants' performance growth rates and the market threshold for exceeding expectations are facing increasing pressure. Since the end of 2022, the market's overly optimistic outlook on the AI profit prospects of tech giants has driven the total market value of the Nasdaq 100 Index, known as the "global tech stock barometer," to expand by approximately $15 trillion However, the so-called "seven giants" and the upward momentum of the Nasdaq 100 index have recently slowed down significantly, mainly due to market concerns that the AI profit outlook is far below expectations, hindering the scale of profit expansion. Dan Taylor, Chief Investment Officer at Man Numeric, stated that the threshold for exceeding performance expectations has been raised. He said, "This should be a fairly good earnings season, but the benchmark has been raised, and they may not be able to meet the market's high expectations." "It may be difficult for these giants to achieve outstanding performance like last year, especially considering that valuations have risen significantly." "Profit Growth of the Seven Major Tech Giants in the U.S. Stock Market Slows" The earnings disclosures of the "seven giants" will begin after the U.S. stock market closes on Wednesday, when Microsoft, Meta, and Tesla are scheduled to release their earnings reports. Apple will follow up with its earnings report on Thursday Eastern Time, while Amazon and Alphabet will announce their earnings next week, and then the earnings of AI chip leader NVIDIA will be released on February 26 Eastern Time. In this long-term bull market for U.S. stocks that began over two years ago, the exceptionally strong profit growth data of the "seven giants," led by NVIDIA and Microsoft, and the booming landscape surrounding artificial intelligence have been key driving forces behind the bull market in the U.S. stock market. During this period, approximately 70% of the S&P 500 index's gains came from large tech companies, but due to expectations of profit declines and doubts about when all AI investments will meaningfully yield returns, the gains have slowed down, even experiencing a brief drop last summer. Possibly a Small Leap Statistics compiled by Bloomberg Intelligence show that Wall Street analysts expect the profits of the seven major tech giants in the fourth quarter to grow by 22% year-on-year, the smallest increase since the first quarter of 2023. Although this is still far above the expected profit increase of about 8% for S&P 500 index constituents, it is significantly lower than the 51% increase in the first quarter and marks four consecutive quarters of contraction. Michael Kasper, an analyst at Bloomberg Intelligence, believes there is reason for concern. Given that the tech sector's weight in the S&P 500 index market capitalization is about 10 percentage points higher than its weight in the overall profits of the index, this stock analyst is worried that either profit growth must exceed expectations or valuations need to decline. The "low-cost computing power wave" led by DeepSeek has caused investors to begin questioning the rationality of spending by major U.S. AI companies. If these tech giants' massive investments in AI still fail to generate satisfactory revenue and profits for investors, as well as performance data that exceeds market expectations, a larger "tech stock sell-off wave" than last summer may occur. Kasper stated, "We all know very well how the stock prices of U.S. tech giants will react if their actual performance fails to meet everyone's expectations." From the perspective of stock price trends relative to expected sales, the valuations of American tech giants appear to be more unstable. According to statistics from Bloomberg Intelligence, the trading price of the IT sector in the S&P 500 index is nearly 8 times the expected sales for the next 12 months, close to the highest level in at least a decade. Valuations of the S&P 500 Index Technology Sector Soar Relative to Sales However, Solita Marcelle, Chief Investment Officer for the Americas at UBS Global Wealth Management, believes these valuations are worth buying into, as investments in artificial intelligence are expected to generate larger overall revenues in the next year or so. "While the era of easy profits in AI may be over, we believe this wave of tech stock gains is far from over, supported by the strong revenue prospects of AI," she wrote in a letter to clients this month. Compared to the current negligible AI revenue figures, the scale of spending by American tech giants on AI has been significantly expanding. Microsoft, Alphabet, Amazon, and Meta are expected to collectively spend over $200 billion on capital expenditures in the last fiscal year, and they have all committed to significantly increasing spending in the current fiscal year. Therefore, in addition to the growth in AI-related revenues, investors will also closely monitor spending expectations, especially after the launch of DeepSeek R1, as investors focusing on American tech giants increasingly question whether the massive AI spending is justified. There are almost no signs that investors are ready to face the "huge disappointment earnings season" of American tech giants. Among the "seven major American tech giants," the demand for put options (to hedge against downside risk) has been shrinking compared to the demand for call options after soaring in December. So far, bullish investors in the S&P 500 index and the Nasdaq 100 index have reaped high returns. Streaming giant Netflix (NFLX.US), as one of the few tech companies that have reported earnings, significantly boosted the Nasdaq 100 index last week after a record increase in subscriber numbers. "Valuations may continue to expand due to bullish market sentiment, but people may feel disappointed about the monetization prospects of AI, potentially triggering a new round of sell-offs and liquidations," said Tyler from Man Numeric, but he emphasized that large tech giants "are still excellent companies that generate substantial cash flow," and with strong cash flow and stock buyback scales, they will remain a "safe haven" during panic sell-offs