Philadelphia Semiconductor Index Plunges 20%... Big Tech Earnings This Week Key to Rebound [Click e-Stock]

Alphabet, Tesla, and Intel to Report Soon
"Key Question: Will AI Investment Continue?"

This week, as Alphabet kicks off a series of earnings releases from major U.S. big tech companies, there are growing expectations that the ability of these results to support the lower end of a recently corrected stock market will be crucial, especially amid concerns over the profitability of the artificial intelligence (AI) industry. The Philadelphia Semiconductor Index has dropped more than 20 percent from its late June peak, officially entering a technical bear market and heightening market nervousness.

On July 20, Jinyoung Kim, a researcher at Kiwoom Securities, commented, "For Alphabet's earnings, whether capital expenditure guidance for this year and next is raised, as well as confirmation of demand for AI accelerators, will be essential. Although TSMC expressed strong confidence in the AI cycle with robust results last week, it was not enough to dispel market worries. For this reason, attention should be paid to whether this round of big tech earnings can meet elevated market expectations."

Last Friday, the New York stock market continued its decline as concerns over AI profitability resurfaced ahead of big tech earnings announcements. The S&P 500 fell 1.01 percent, while the Nasdaq dropped 1.40 percent. The Philadelphia Semiconductor Index, which had seen a strong rally thanks to the AI investment boom this year, declined 1.63 percent, marking a three-day losing streak. The index has lost 18.1 percent in July alone.

Jeonghoon Seo, a researcher at Samsung Securities, stated, "Investors are expressing doubts about whether big tech companies, which are pouring investments into AI by raising both equity and debt, can maintain this pace. The key issue is whether capital expenditure (Capex) can continue its upward trend alongside solid earnings growth."

Concerns about rising competition from China have also added to the unease. This follows news that Chinese AI company Moonshot's newly-released 'Kimi K3' model is comparable to American big tech offerings in terms of price-to-performance.

However, Seo added that there still remains a performance gap with existing top-tier models, and since Chinese companies also require substantial computing resources for such models, infrastructure investment perspectives remain positive.

Alphabet, which plunged more than 4 percent the previous day on news of another delay in launching its next-generation AI model, fell an additional 2.17 percent. In contrast, memory-related stocks attempted to rebound, with the DRAM ETF rising 0.73 percent and SK hynix American Depositary Receipts (ADR) gaining 1.13 percent.

This week, earnings reports are scheduled for General Motors on July 21, Alphabet and Tesla on July 22, and Intel and RTX on July 23.

Meanwhile, as U.S. and Iranian airstrikes intensified, WTI crude oil rose 4.48 percent to close at $82.49. Of all industry sectors, only energy ended in positive territory—up by more than 1 percent—while all other sectors closed lower.

This content was produced with the assistance of AI translation services.