Global one-stop asset allocation platform BiyaPay market observation shows that there was a noticeable divergence in the U.S. stock market last week.

The Nasdaq and S&P 500 indexes closed lower for the week, while the Russell 2000 index rose against the trend. As AI capital spending continues to expand, investors' focus is shifting from growth expectations to more practical questions: How much capital have companies invested, and how long will it take to convert these investments into revenue, profits, and cash flow?

As of the close on October 23, the S&P 500 index fell by 0.47% for the week, the Nasdaq Composite Index fell by 0.71%, the Dow Jones Industrial Average rose by 0.41%, and the Russell 2000 index rose by 2.00%. The performance differences among the indices indicate that the market is not completely shifting towards safe havens; capital is being reassessed in terms of the growth quality and valuation of different companies.

From October 26 to 30, Microsoft, Alphabet, and Amazon will successively announce their earnings reports, and the Federal Reserve will also announce its interest rate decision. The subsequently released preliminary data for U.S. GDP in the third quarter and the September PCE inflation data may also affect the market's judgment on the path of interest rates. Whether AI investments can deliver returns will join company earnings and capital costs as key focal points this week.

1. Last Week Review: Market Did Not Weaken Overall, Capital Preferences Are Differentiating

Meta Under Pressure, AI Investment and Cash Returns Become the Focus

Meta's revenue grew by 26% year-over-year in the third quarter, but its stock price was under pressure after the earnings report was released. Rather than focusing on the revenue growth itself, the market is more concerned with the company's continuously expanding investments in AI infrastructure and the impact of these investments on cash flow and future profits.

Meta's operating cash flow for the quarter was $32.79 billion, and free cash flow was negative $2.12 billion. The company also adjusted its full-year capital expenditure guidance, narrowing the range from a previous $130 billion to $145 billion to $135 billion to $145 billion, raising the lower limit by $5 billion while keeping the upper limit unchanged.

This does not mean that Meta's advertising business has lost its growth momentum. More accurately, the simultaneous existence of revenue growth and cash flow pressure reflects the fact that building AI infrastructure requires significant funding, and it remains to be seen whether these investments can continue to improve advertising efficiency and generate new revenue, which will be validated in subsequent performance results.

Additionally, legal-related expenses for the quarter also impacted profits. Therefore, analyzing Meta's performance cannot simply attribute all profit changes to AI investments; rather, it should separately assess the impacts of core business performance, one-time expenses, and capital expenditures.

What will be noteworthy next is whether AI can further enhance ad recommendation and delivery efficiency, whether the added infrastructure can convert into actual commercial revenue, and whether the growth in capital expenditures can gradually generate more sustainable cash returns.

Tesla's Capital Expenditure Changes Also Need to Be Judged in Context of Business Progress

Tesla is also facing a trade-off between investments and returns. The company previously adjusted its expected capital expenditures for 2026 to be over $20 billion, down from a previous expectation of over $25 billion.

The drop in capital expenditure expectations may alleviate some financial pressure, but it does not directly prove that operating efficiency has improved, nor does it confirm that the company's investments in new businesses are slowing down. A comprehensive judgment must still take into account project progress, revenue contributions, profit margins, and cash flow changes.

Meta and Tesla have different business structures, and the purposes of capital allocation differ, but the circumstances of both companies reflect a common trend: the market is no longer just focused on how much capital companies invest, but is more concerned with when these investments generate revenue, whether they can enhance profitability, and how much cash they will ultimately leave for the companies.

Software and Cybersecurity Stocks Exhibit Divergent Performance, AI Trading Logic Still Adjusting

The AI industry chain is not a whole that can be valued with a unified logic.

Hardware companies such as chipmakers and server manufacturers depend more on customer procurement, order delivery, and product cycles; software and cybersecurity companies need to focus on customer renewals, payment scales, average transaction values, and service costs. Growth in AI demand does not mean that all related companies will experience the same revenue growth rates and profit margins.

Some stocks rebounded after adjustments, potentially reflecting valuation repairs or capital reallocations, but this does not equate to improvements in fundamentals. To judge whether rebounds can be sustained, it is essential to monitor indicators like orders, revenue, customer demand, and profit margins.

Therefore, the significance of earnings reports this week lies not only in whether companies can exceed market expectations, but also in how management explains the scale of AI investments, the return cycles, and future business objectives.

Cross-Market Observation: Capital Allocation and Trading Tools Are Equally Important

The exacerbated market divergence has also made cross-market observation more important. When the U.S. stocks, Hong Kong stocks, and digital assets are influenced by different factors, in addition to tracking each one's price changes, managing the capital usage paths across various markets has also become a concern for some users.

As a global one-stop asset allocation platform, BiyaPay uses USDT as the core capital entry point, connecting U.S. and Hong Kong stocks, cryptocurrencies, commodity futures, and cross-border remittances through a single account system. The platform also supports exchanges for over 30 fiat currencies and more than 200 digital currencies, offering real stock trading in U.S. and Hong Kong stocks with zero commission.

For users concerned about multiple markets simultaneously, concentrating on understanding the trends and related services of different assets can reduce the hassle of switching between different tools. However, tools solve the issues of capital usage and trading paths, but they cannot replace market analysis. U.S. stocks, Hong Kong stocks, and digital assets all have distinct pricing logic and risk characteristics, and they still require judgments based on macro environments, core corporate fundamentals, and individual risk tolerance.

2. Hong Kong Stock Observation: Technology Sector Still Needs to Wait for Earnings Verification

The Hong Kong stock market was overall weak last week. On October 23, the Hang Seng Index closed at 23093.37 points, rising by 0.69% on the day but falling about 4.52% for the week; the Hang Seng Tech Index closed at 3871.66 points, rising by 2.05% on the day but falling about 5.76% for the week.

The rebound on Friday is not enough to confirm a trend reversal. Future trends still require assessments based on corporate earnings, industry demand, valuation levels, and market liquidity.

The capital expenditure changes of large tech companies in the U.S. will also affect market expectations for the Hong Kong tech sector. However, the revenue structures and profit models of internet platforms, consumer electronics, and semiconductor companies vary, and the same AI growth logic cannot be simply applied to all.

For tech stocks, the key remains to distinguish between short-term fluctuations driven by market sentiment and actual changes in corporate operating conditions.

3. Macro Observation: Oil Prices and U.S. Treasury Yields Remain Important Variables in Valuation

As of October 23, WTI crude oil futures settled around $103.44 per barrel, and Brent crude oil futures settled around $111.66 per barrel, with the U.S. 10-year Treasury yield at about 5.00%.

Rising energy prices may improve revenues for some upstream energy companies, but they may also raise costs for transportation, manufacturing, and some consumer businesses. For tech companies, energy costs and capital costs will similarly impact infrastructure development, business expansion, and valuation levels.

In terms of macro data, the U.S. October composite PMI preliminary value is 57.6, down from September's 58.4, but still within the expansion range. The final consumer confidence index from the University of Michigan stands at 48.0, roughly unchanged from September's 48.1; the one-year inflation expectation has risen from 4.6% to 4.7%.

These indicators present signals in different directions: corporate activity remains resilient, but consumer confidence is relatively weak, and short-term inflation expectations have increased. No single indicator can determine market direction; investors still need to assess economic growth, inflation trends, and capital costs simultaneously.

If inflationary pressures persist, market expectations for maintaining high interest rates may further affect overvalued assets; if inflation cools while corporate earnings remain resilient, this could provide a more favorable environment for risk assets. If economic demand significantly weakens, even if interest rate expectations decline, there remains a need to stay alert to the risks of downward earnings forecasts.

4. This Week's Focus: Microsoft, Google Earnings Reports and Federal Reserve Meeting

Microsoft and Alphabet: Can Cloud Business Growth Cover AI Investments?

Microsoft and Alphabet are both scheduled to announce their earnings reports after market close on October 28, Eastern Time, corresponding to the early morning of October 29 in Beijing time.

Microsoft's earnings report will be particularly focused on Azure cloud business growth, AI service demand, and cloud business profit margins. If revenue growth is accompanied by stable profit margins, new investments are more likely to gain market recognition; if costs rise faster than revenue growth, doubts about the return cycle of AI investments may continue to persist.

Alphabet will need to answer two questions: Can the search and advertising business maintain cash-generating ability, and can Google Cloud convert AI demand into revenue and operating profits?

Progress of AI products such as Gemini is worth paying attention to, but product usage levels, payment scales, and profit contributions are not the same thing. Markets ultimately need to see how commercialization capabilities are reflected in financial statements.

For both companies, besides whether revenue and profits exceed expectations, the management's explanations regarding capital expenditures, cloud business demand, and future growth may also influence stock price reactions after the earnings reports.

Amazon: AWS Growth and Capital Expenditures Need to Be Viewed Together

Amazon is scheduled to announce its earnings report after market close on October 29, Eastern Time, corresponding to the early morning of October 30 in Beijing.

The growth of AWS will provide important clues for the market's judgment on cloud computing demand, but looking solely at the revenue growth rate is not enough. Whether the new infrastructure can be put into service as planned, whether customer demand can be sustained, and whether operating cash flow can support expansion are also related to growth quality.

At the same time, Amazon's retail and logistics businesses will also impact the overall profitability of the group. Changes in delivery efficiency, fulfillment costs, and retail profit margins need to be observed separately from cloud business performance, and then a comprehensive judgment on the group's cash-generating capacity should be made.

For the AI industry chain, cloud vendors' capital expenditures not only affect their own financial performance, but also relate to demand expectations for upstream chips, servers, and related infrastructure companies.

Federal Reserve Meeting: After Interest Rate Decisions, Policy Signals Need to Be Considered

The Federal Reserve will hold a policy meeting from October 27 to 28, with the interest rate decision expected to be announced at 2 p.m. Eastern Time on October 28, followed by a press conference.

The market is not just focused on whether interest rates will be adjusted, but also on how the post-meeting statement and press conference will influence the judgment on the future policy path. Even if the interest rate decision meets expectations, any changes in policy language may still impact U.S. Treasury yields, the dollar, and the performance of overvalued assets.

This week, preliminary data for U.S. GDP in the third quarter and the September personal income and spending report, which includes PCE price data, will also be released, with the publication time at 8:30 a.m. Eastern Time on October 29, corresponding to 8:30 p.m. on October 29 in Beijing.

The GDP data will help assess the actual state of economic growth, while PCE is an important inflation indicator that the Federal Reserve is closely monitoring. Investors need to observe both overall and core inflation, year-on-year and month-on-month changes, alongside consumer and investment performance to assess price pressures and demand conditions.

If economic growth remains resilient while inflation struggles to ease, higher capital costs may continue to limit valuations; if inflation cools and demand remains stable, corporate earnings may find a more favorable environment. If economic demand significantly weakens, even if interest rate expectations decline, the risks of downward earnings forecast revisions must still be watched closely.

Other Earnings Reports: Storage, Energy, and Financial Companies Provide Supplementary Clues

This week, there will also be earnings announcements from storage, energy, and financial companies.

In the storage sector, attention can be paid to product structures, price changes, enterprise-level demand, and profit margins; energy companies need to observe realized prices, output, and cash flow, and should not directly view the October oil price changes as already reflected in third-quarter performance; financial companies can focus on net interest income, deposit costs, credit impairments, and capital returns.

These industries can provide supplementary insights into market demand, costs, and capital environment from different angles, but their respective business models differ, so corresponding indicators should still be used for analysis. Specific earnings announcement timings are subject to the latest announcements from the companies.

5. Summary: Beyond the Scale of AI Investments, Returns Are More Important

The divergence in U.S. stocks last week indicates that the market is not simply bullish or bearish on tech stocks but is re-evaluating different companies' growth quality, funding needs, and profitability.

This week, the earnings reports from Microsoft, Alphabet, and Amazon will test whether AI investments can be converted into revenue, profits, and cash flow; the Federal Reserve's interest rate decision, U.S. third-quarter GDP preliminary data, and September PCE data will influence the market's judgment on future capital costs and economic growth.

Moving forward, what truly deserves attention is not which company invests the most, but which company can sustainably convert investments into verifiable business results. As the competition in AI enters a phase that emphasizes realization capabilities, revenue quality, profit margins, and cash flow will become vital bases for judging a company's long-term value.

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