Tech giants' earnings season is coming again, and this time the focus is still on: NVIDIA and capital expenditures

Buckle up! Q3 Tech Stock Earnings Reports Are Coming.

The new season of earnings reports is kicking off, with next week's focus on Tesla leading the way in the tech stock earnings reports.

With the Fed's rate cut "in the bag" and the strong rebound of tech stocks, the S&P 500 index has recently hit a new all-time high. At the same time, this year's tech stock earnings reports and market reactions have shown that investors are harder to please.

Can large-cap tech stocks sustain their momentum? This quarter's earnings reports will be a key driving factor.

NVIDIA: Q3 Growth May Slow Down, Market Focuses on AI Investments and Blackwell

As a giant in AI chips, NVIDIA's latest earnings report will still capture market attention.

Some believe that considering the expensive stock price and the high base from the same period last year, NVIDIA's Q3 performance may "face challenges".

In the third quarter of last year, NVIDIA's total revenue soared by 206% to $18.1 billion, with data center revenue growing by 279% to $14.5 billion.

In addition, in the last quarter's earnings report, NVIDIA's revenue guidance for the third quarter was $32.5 billion, in the middle of the expected range ($32-33 billion), falling short of the highest expectations, also signaling a possible slowdown in performance.

Apart from financial data, analysts suggest that investors will also closely monitor NVIDIA's AI investment scale and the latest news on the Blackwell chip.

In an interview on October 3rd, NVIDIA's founder and CEO Jensen Huang stated that the upcoming Blackwell chip has been fully produced and the demand is "crazy". This statement once again ignited market enthusiasm, pushing the company's stock price to a historic high in four months.

Since the beginning of this year, NVIDIA's stock price has risen by over 181% to $135.72 per share, potentially surpassing Apple to become the largest publicly traded company by market value.

Capital Expenditure Expected to Continue Surging, Wall Street Bullish on AI Potential

In addition to the star tech stocks themselves, investors are also closely watching capital expenditures, especially AI investments.

Currently, Wall Street expects capital expenditures of tech giants to continue surging.

According to Visible Alpha, Wall Street expects the total capital expenditures of Microsoft, Alphabet, Meta, and Amazon to grow by 56% year-on-year to over $60 billion by the end of the third quarter.

By the fourth quarter, Wall Street expects another double-digit significant increase in the above-mentioned capital expenditures, pushing the total annual spending to around $231 billion, about 49% higher than in 2023 According to FactSet's estimate, Apple's R&D expenses are expected to reach a new record of $31.5 billion this quarter, a nearly 6% year-on-year increase, while revenue growth is expected to be less than 2%.

Morgan Stanley stated in a report earlier this month:

"By 2025, cloud capital expenditures will be equivalent to the total actual expenditure of the entire Apollo moon landing program."

Colin Sebastian from Robert W. Baird believes that investors have not fully taken into account the current surge in capital expenditures, which will lead to increased depreciation expenses in the future. He expects Alphabet, Amazon, and Meta to report revenues 1% to 4% lower than Wall Street's general expectations by the fourth quarter.

Although AI has not yet fully commercialized, Wall Street remains largely optimistic about the potential of AI technology. A survey conducted by Morgan Stanley on over 400 companies found that around 40% of respondents using generative AI solutions reported returns on investment exceeding expectations.