Four major U.S. tech companies—Microsoft, Alphabet, Meta, and Amazon—reported an average revenue growth rate exceeding 20% for the second quarter, achieving record earnings surprises. However, major financial institutions are raising alarms about a potential AI bubble.
According to the IT industry on August 5, Alphabet (+24%), Meta (+28%), Amazon (+20%), and Microsoft (+18%) recorded an average revenue growth rate of 22.5% year-over-year for Q2. The average increase in net profit reached approximately 140%.
The market reacted positively to these results, with semiconductor stocks seeing a significant rise. The Philadelphia Semiconductor Index (SOX) surged 8.2% during the week of the earnings announcements, although individual stock performances varied.
Meanwhile, credit rating agencies have issued warnings regarding the sustainability of AI investments. Moody's assessed that the credit quality of six hyperscalers, including Microsoft, Amazon, Alphabet, Meta, Oracle, and CoreWeave, is at risk as they transition from 'asset-light' to 'asset-intensive' models.
Moody's projects that capital expenditures for these six companies will increase from $785 billion this year to nearly $1 trillion next year. Their direct debt is already approaching $460 billion. S&P Global Ratings recently downgraded Oracle's credit rating to the lowest investment grade of 'BBB-.'
Additionally, there are opinions that the significant increase in net profits for Alphabet, Amazon, and Microsoft is largely due to substantial gains from investments in OpenAI and Anthropic, which differ from improvements in core profitability.
The fact that big tech companies are executing a significant portion of their AI capital investments through special purpose vehicles (SPVs) is also contributing to market unease, as it shifts related debt off their balance sheets.
The 'AI bubble' concerns are reflected in credit default swap (CDS) premiums. Oracle's five-year CDS premium reached 215 basis points at the end of last month, surpassing the peak of 198 basis points during the 2008 financial crisis. Nvidia (79 basis points) and Alphabet (67 basis points) also set new all-time highs. CDS are derivatives that hedge against the risk of bond defaults, and rising premiums indicate that the market perceives higher credit risk for these companies.
* This article has been translated by AI.
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