US stocks struggle to adjust but cannot hide the shine of technology, market continues to focus on earnings reports.

Recently, Wall Street has been highly focused on whether the financial reports of large tech giants can meet the high expectations. Overall, most of these companies have not disappointed. Last Friday's market sell-off led to a weekly decline in the US stock market, partially due to the mixed results released by Amazon.com, Inc. (AMZN.US) after hours on Thursday, combined with disappointing non-farm payroll data, and concerns about the economic impact of President Trump's global tariffs policy. However, for investors expecting tech companies to support their market dominance with strong performance, most companies' financial reports still provide sufficient basis. Kevin Gordon, Senior Investment Strategist at Charles Schwab Corp, pointed out that the tech industry is showing a resilient nature like "Teflon", with strong fundamentals, significantly higher revenue growth than expected, and relatively healthy profit margins. Although not without flaws, and with valuations nearing historical highs, we still maintain a highly optimistic attitude, especially towards the large-cap tech stocks in the market. Alphabet Inc. Class C's parent company, Alphabet (GOOGL.US), kicked off the earnings season last week with strong sales growth driven by its artificial intelligence business. This week, Apple Inc. (AAPL.US) recorded its strongest revenue growth in over three years; Meta Platforms (META.US) saw its stock price soar to a historic high due to better-than-expected performance and disclosure of aggressive investment plans in the artificial intelligence field; Microsoft Corporation (MSFT.US) showed strong performance in its cloud business driven by artificial intelligence demand, with its market value surpassing $4 trillion at one point, becoming the second company in history to achieve this milestone, and its stock price has been rising for 10 consecutive weeks, setting a record for the longest continuous increase since 2023. Amazon.com, Inc., on the other hand, was an exception, with its performance outlook appearing somewhat flat due to slowing growth in its cloud computing division and significant investments in artificial intelligence. Valuation pressure is beginning to show The Nasdaq 100 index fell by 2.2% last week, with most of the decline concentrated on Friday; the Bloomberg "Seven Big Tech Giants" index, which includes the above-mentioned companies and Tesla, Inc. (TSLA.US), fell by 1.5% for the week. Nevertheless, the Nasdaq 100 index is still up more than 30% from its low point in early April, with the "Seven Big Tech Giants" index up over 40%. These gains have raised questions among Wall Street professionals: have tech stocks been overbought? The forward price-to-earnings ratio of the Nasdaq 100 index is close to 27 times, significantly higher than the 22 times historical average over the past 10 years. However, companies that have released their financial reports have not shown signs of significantly deteriorating fundamentals, a crucial performance given the continuing uncertainties surrounding trade policies and tariff impacts. Bloomberg data shows that 96% of companies in the S&P 500 technology sector exceeded profit expectations, while 93% met revenue expectations; compared to the entire index, the proportions exceeded profit and revenue expectations by 82% and 68%, respectively. Despite Wall Street's long-term positive attitude towards large-cap tech stocks, the earnings released last week further reinforced their growth potential. Bloomberg Intelligence data shows that the profit growth expectations for the "Seven Big Tech Giants" have been raised from 21.4% a month ago to 24.2%, and revenue growth expectations have been raised from 11.5% in early July to 13.4%. Of course, this growth rate has slowed compared to last year when the group had a net profit growth of 36% and revenue growth of 14%. However, compared to the overall market, their growth advantage is still significant: the profit growth expectation for the entire market in 2025 is 8.9%, and the revenue growth expectation is 5.5%. Michael Neill, Senior Investment Analyst and Fund Manager at UBS Group AG Asset Management, said, "Given these companies' prior growth rates and duration, the current slowdown in growth is reasonable. We have not observed a significant slowdown that would cause concern, just indicating that large companies cannot sustain high-speed growth indefinitely." Focus on NVIDIA Corporation's quarterly results Currently, investors are closely monitoring NVIDIA Corporation. The chipmaker, which is at the core of the artificial intelligence boom and the world's most valuable company, is set to release its financial report on August 27. Its main competitor in the artificial intelligence processor field, the relatively smaller AMD (AMD.US), will be the first to disclose earnings on Tuesday. For these two chip companies, key positive signals have been clear: large tech companies have reiterated their commitment to continued investment in the field of artificial intelligence. Meta, Microsoft Corporation, Alphabet, and Amazon.com, Inc. have all raised their capital expenditure plans, and Bloomberg's supply chain data shows that these four companies contribute over 40% of NVIDIA Corporation's revenue, making these developments a series of positive supports. Michael Neill of UBS Group AG Asset Management said, "The applications of artificial intelligence are continuously landing, and some companies have begun to reap tangible rewards. This means that investment in this field is no longer purely speculative. Of course, this does not mean that large tech stocks will not experience overvaluation or pullbacks, but the weight of the technology sector in the overall market is irreversibly increasing. This trend has been consistent throughout my entire career, and there is currently no reason to believe it will stop."