If Google's/Amazon's earnings reports fall short of expectations, tech stocks may further crash.
Author: Deep Tide TechFlow
U.S. Stocks: AMD's "Earnings Disaster" Triggers Tech Stock Bloodbath
Today's main character is AMD, whose earnings report has sparked a bloodbath in tech stocks.
The earnings report looks decent on the surface:
- Q4 revenue of $10.27 billion, exceeding expectations of $9.67 billion
- Adjusted EPS of $1.53, surpassing expectations of $1.32
- Q1 guidance: $9.8 billion (±$300 million), also slightly above the expected $9.38 billion
But why is the market furious?
The issue lies not in the numbers, but in the expectation gap. Some Wall Street analysts expected AMD to provide a more aggressive guidance, especially with the AI boom in full swing. When the guidance was "only slightly better than expected" rather than "far exceeding expectations," the market chose to vote with its feet.
More critically: operating expenses are out of control. AMD's operating expenses were $200 million higher than the guidance, marking several consecutive quarters of overspending.
J.P. Morgan analyst Harlan Sur bluntly stated: "AMD has been 'overspending,' which harms profitability."
The chain reaction led to AMD plummeting 17%; Broadcom down 7%; Micron down 11%; Lam Research down 10%; Applied Materials down 9%; Nvidia down 3%; the Philadelphia Semiconductor Index significantly dropped, and the entire chip sector faced a massacre.
The nightmare in the software sector continues. The iShares Expanded Tech-Software ETF (IGV) fell another 4% today, cumulatively plummeting 17% within a week.
The root of the panic lies in last week's release of an AI automation tool by Anthropic, capable of handling legal work. This made the market suddenly realize: AI is not just a helper for software; it could be the terminator of software.
If AI can automatically handle legal documents, generate code, and manage customer relationships, can the subscription-based SaaS business model survive?
Not all tech stocks are crashing; there were also winners today:
Eli Lilly surged 8%: Q4 earnings far exceeded expectations; 2026 guidance: revenue of $80-83 billion (expected $77.6 billion), EPS of $33.5-35 (expected $33.23); weight loss drug Zepbound sales grew 122%, diabetes drug Mounjaro grew 110%.
Super Micro Computer rose 10%: Q2 earnings exceeded expectations, raising full-year guidance to $40 billion (expected $36.1 billion); strong demand for AI servers.
Amgen rose 3.67%: strong earnings propelled the healthcare sector to be one of the few safe havens today.
Uber fell 5%; Chipotle plummeted 6%, confirming once again that American consumers are tightening their wallets.
Cryptocurrency: Drops below $74,000, a 16-month low
This afternoon, Bitcoin briefly fell below $73,000, hitting a new low since November 2024.
Ethereum dropped below $2,200.
Why is Bitcoin falling harder than tech stocks?
Bitcoin has a very high correlation with the Nasdaq. When AMD triggered a crash in chip stocks and the Nasdaq fell 1.5%, Bitcoin, as the "king of risk assets," naturally saw a larger decline.
Interestingly, those mining companies transitioning to AI infrastructure also crashed today:
Cipher Mining fell over 10%; IREN fell over 10%; Hut 8 fell over 10%.
The reason? AMD's plummet led the market to start questioning the return on investment in AI infrastructure; these companies just shifted from "mining" to "AI computing power" and are now facing concerns about the AI bubble bursting.
The only bright spot, TeraWulf rose 12% due to acquiring two industrial sites in the U.S., but this is an exception.
Hasegawa from Japanese crypto analytics firm Bitbank stated: "The $70,000 level may be a key reference point for a short-term bottom. If it substantially falls below this level, a significant reset of market conditions may be needed."
Precious Metals: Gold Breaks $5,000, Strong Momentum
Gold continues to rebound, breaking the $5,000 mark
Spot gold closed at around $5,010-$5,050 per ounce, rising over 2% today. This follows a 6% surge yesterday (the largest single-day increase since 2008).
Silver continues to soar, up 7%, returning above $85.
Why can gold continue to rebound?
From last Friday's drop to $5,600 down to Monday's $4,400, gold fell over 20%. This sharp decline cleared out leverage and created a buying opportunity.
Long-term investors and central banks are taking advantage of the low prices. After yesterday's 6% surge, today's continued rise indicates strong buying interest.
The U.S. dollar index fell today, providing support for gold. The Chinese yuan rose to a 2.5-year high against the dollar, reflecting the overall weakness of the dollar.
Gold's long-term targets remain unchanged.
Mainstream Wall Street institutions remain bullish:
J.P. Morgan: Year-end target of $6,300
- Deutsche Bank: Year-end target of $6,000
Currently around $5,000, there is still over 20% upside potential.
The Deeper Logic of the Market: Concerns Over AI Bubble Bursting?
Today's market movements reveal a core issue: the speed of AI commercialization is severely lagging behind the growth of capital expenditures.
AMD's problem is not that revenue growth is not fast enough (a year-on-year growth of 26% is already strong), but rather costs are out of control. To remain competitive in the AI race, AMD is burning cash at an alarming rate, but the market is starting to question: can this money bring corresponding returns?
If even a core player in AI chips like AMD cannot control costs, can downstream AI application companies, software companies, and infrastructure companies make money?
Key Events Remaining This Week
Thursday-Friday:
- Alphabet (Google) earnings report
- Amazon earnings report
- Initial jobless claims (Thursday)
- U.S.-Iran talks (Friday)
If Google's/Amazon's earnings reports fall short of expectations, tech stocks may further crash.
If U.S.-Iran talks break down, geopolitical risks will escalate, and gold will rise further.
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