CMSC: AI investment expectations keep adjustingwhat is the market worried about?

CMSC released a research report stating that capital expenditure expectations continue to be revised upward, but the actual delivery pace remains uncertain. Major technology companies continue to raise future investment plans, but some companies' actual capital expenditure in the third-quarter reports fell short of expectations, reflecting constraints such as delays in equipment and infrastructure delivery. The market still expects capital expenditure growth to peak around the third quarter of 2026, and the subsequent implementation of investments remains to be observed. CMSC's main views are as follows: 1. How did the market react after earnings disclosures? In the three earnings seasons this year, U.S. stocks showed a pattern of weakening quarter by quarter: the first quarter was mainly a rebound from oversold conditions, the second quarter continued to fluctuate upward, and the third quarter shifted to range-bound adjustment. Since the start of the year, upward earnings revisions have been the main DRIVE behind the resilience of U.S. stocks, while valuation contraction has created a clear drag. Against the backdrop of high U.S. Treasury yields and the market's caution toward inflation and monetary policy, investors have not granted a higher valuation premium to earnings growth. In addition, about 83% of U.S. companies that have disclosed results this year beat EPS expectations, but the index-weighted average share price gain on earnings days was 1.2%. Especially after entering the third quarter, the market became more cautious in pricing positive news, and valuation contraction began to become an important factor constraining index performance. 2. Over three consecutive quarters of earnings, how have market focuses evolved? The three rounds of earnings show that AI demand continues to grow, but the market's focus has gradually shifted from demand verification to investment returns and the quality of delivery. During the first-quarter reporting period, the market mainly focused on cloud business growth, AI orders, and companies' competitive advantages; during the second-quarter reporting period, as capital expenditure continued to expand, the importance of whether new investment could be converted into revenue, profit, and cash flow increased; during the third-quarter reporting period, although cloud business and AI-related revenue remained high-growth, the overall market reaction was relatively weak, with issues such as project delivery delays, cash flow pressure, and slowing growth in traditional businesses attracting further attention. 3. AI investment expectations keep adjustingwhat is the market worried about? Capital expenditure expectations continue to be revised upward, but the actual delivery pace remains uncertain. Major technology companies continue to raise future investment plans, but some companies' actual capital expenditure in the third-quarter reports fell short of expectations, reflecting constraints such as delays in equipment and infrastructure delivery. The market still expects capital expenditure growth to peak around the third quarter of 2026, and the subsequent implementation of investments remains to be observed. AI-related revenue remains high-growth, but investment returns and cash flow performance are diverging. Revenue at cloud businesses and specialized computing power service providers is growing rapidly, but operating cash flow at some companies is no longer sufficient to cover capital expenditure, and there are also differences in profit margins and free cash flow performance. At the same time, slowing growth in traditional businesses and the impact of AI on existing business models are gradually drawing attention. External financing demand is rising, and AI credit risk is showing differentiated pricing. Interest burdens and CDS spreads have risen at some companies, with financing pressure more prominent at specialized computing power service providers. Long-term leases, project guarantees, and revolving financing arrangements have further increased funding linkages across the industrial chain, and future attention still needs to be paid to financing costs, cash flow coverage capacity, and potential risk transmission. Risk warning: Global economic and industrial policies exceed expectations, and geopolitical risks exceed expectations.