Fasten your seatbelts! Tech stocks' Q3 earnings reports are about to roll in.

The new earnings season is kicking off, and next week's tech stock earnings, led by Tesla, are expected to continue to be a focal point for investors.

With the Federal Reserve's interest rate cut "finally happening" and a strong rebound in tech stocks, the S&P 500 index has recently hit a new historical high. At the same time, tech stock earnings and market reactions so far this year have shown that investors are harder to please.

Can big tech stocks continue their previous momentum? The earnings reports for this quarter will be a key driver.

Nvidia: Q3 growth may slow down, market focuses on AI investment and Blackwell

As a giant in AI chips, Nvidia's latest earnings report will still capture the market's attention.

Some argue that, considering the high stock price and the high base of the same period last year, Nvidia's Q3 performance may "face difficulties."

In the third quarter of last year, Nvidia's total revenue soared by 206% to $18.1 billion, while data center revenue grew by 279% to $14.5 billion.

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In addition, in the earnings report for the previous quarter, Nvidia's revenue guidance for the third quarter was $32.5 billion, in the middle of the expected range ($32-$33 billion), not reaching the highest expectation, also sending a signal that revenue growth may slow down.In addition to financial data, analysis suggests that investors will also closely monitor the scale of NVIDIA's AI investments and the latest news on the Blackwell chip.

In an interview on October 3rd, NVIDIA founder and CEO Jen-Hsun Huang stated that the company's upcoming Blackwell chip is already in full production with "crazy" demand, which has once again ignited market enthusiasm and pushed the company's stock price to a record high for the first time in four months.

So far this year, NVIDIA's stock price has risen by more than 181% to $135.72 per share, potentially surpassing Apple to become the most valuable publicly traded company.

Capital expenditures are expected to continue to surge, and Wall Street remains optimistic about AI potential.

Apart from the star technology stocks themselves, investors are also closely monitoring capital expenditures, especially AI investments.

Currently, Wall Street expects capital expenditures of tech giants to continue to surge.

According to Visible Alpha, Wall Street expects the total capital costs of Microsoft, Alphabet, Meta, and Amazon to increase by 56% year-on-year to over $60 billion by the third quarter.

By the fourth quarter, Wall Street expects the aforementioned capital expenditures to once again see a significant double-digit increase, pushing the total annual expenditure to about $231 billion, which is about 49% higher than in 2023.

According to FactSet estimates, Apple's R&D expenses for this quarter are expected to set a new record of $31.5 billion, growing by nearly 6% year-on-year, while revenue growth is expected to be less than 2%.Morgan Stanley stated in a report earlier this month:

“By 2025, cloud capital expenditures will be equivalent to the actual total expenditure of the entire Apollo moon landing program.”

Colin Sebastian from Robert W. Baird believes that investors have not fully considered that the current surge in capital expenditures will lead to increased depreciation expenses for future earnings. He expects that Alphabet, Amazon, and Meta's revenues for the fourth quarter will be 1% to 4% lower than Wall Street's general expectations.

Although AI has not yet truly been commercialized, Wall Street still largely favors the potential of AI technology. A survey conducted by Morgan Stanley on over 400 companies found that among respondents adopting generative AI solutions, about 40% of respondents indicated that their return on investment exceeded expectations.