Ahead of Earnings: Compute, AI and Energy Risks
The AI trade and investment continues and broadening competition speaks to strategy execution
In a video analysis, I frame up some areas of focus ahead of second quarter earnings. They center on:
• Execution on AI strategy
• Capex trends
• Competitive dynamics across hyperscalers
• Semiconductor sector's memory chip data trends (thanks to Ivana Delevska of Spear Alpha)
Additionally, some overall macroeconomic risks are noted regarding the continued military campaigns between the U.S. and Iran and its implications for energy.
My overall take on U.S. stock market earnings: good news is to generally be rewarded, though not always — some results have “backfired” when the market drew the wrong inferences. Continued transparency on strategy with execution will keep paying off, as it has for Apple.
The top four hyperscalers (Amazon, Microsoft, Alphabet, Meta) are spending $725 billion this year. Google and Amazon have both signaled capex increases for 2027.
Apple and chipmaker Nvidia are now neck-and-neck for the world’s largest market cap, both just under $5 trillion. As of 7/20, behind them: Google ($4.2T), Microsoft ($2.9T), Amazon ($2.6T).
Apple’s re-rating is likely owing to its integrated hardware/software ecosystem and its announced of a chipmaker acquisition — the same “integrated” logic hyperscalers get credit for, applied to Apple.
Also noteworthy is hyperscaler capital spending.
The top four hyperscalers (Amazon, Microsoft, Alphabet, Meta) are spending $725 billion this year.
Google and Amazon have both signaled CapEx increases for 2027.
A new partnership was announced between Microsoft and AMD, indicating how collaborative and fluid this ecosystem is.
Microsoft announced a partnership with AMD for new “Helios” racks — a full-stack, integrated system running on it Azure platform.
In December of 2025 at an event in San Francisco, chief executive of AMD Lisa Su commented that ‘AI is not a bubble.’ The announcement from yesterday was a bump for AMD’s stock and a sign of broadening competition among chipmakers.