Big Tech Earnings Release Imminent, This 'Signal' Is Most Important!

Summary

Dr. Kim Hyo-jin of Shinhan Securities discusses how to interpret the upcoming Big Tech earnings with a focus on AI investment signals. She analyzes the financial conditions of Microsoft, Alphabet, Meta, and Amazon, highlighting Microsoft as the most important report due to its cash strength and transparency. She also warns that KOSPI’s rebound will be choppy because of supply overhang from leveraged ETF positions, while Big Tech’s large contract backlogs suggest AI capex will remain resilient.

• Big Tech earnings this week (starting with Alphabet) are crucial for market direction after recent sell-off.
• Hyperscalers hold contract backlogs worth 2.5x annual capex, indicating near-term AI investment will persist.
• Microsoft is the key bellwether: it has the deepest cash reserves and is most transparent about short-lived asset investment.
• Amazon is the most cash-strapped, with negative free cash flow and heavy borrowing, making its capex guidance a risk.
• KOSPI’s recovery will be stifled by selling pressure from leveraged ETF positions concentrated in the 7,600-8,400 range.
• Investors should scrutinize the share of short-lived assets (GPUs, CPUs) in capex, not just the total spending number.
• AI platform Anthropic’s accelerating revenue suggests that AI monetization is improving, though not yet proven at scale.
• The ideal positive signal from earnings would be guidance that capex is increasing further, especially on short-lived assets like HBM-bound chips.