As the U.S. corporate Q3 earnings season begins, the market is closely watching how much return companies are getting from massive AI investments.
Over the past period, major tech firms, known as hyperscalers, have accelerated AI infrastructure investments—from data centers and processing chips to cloud systems—to support business growth, while stocks and earnings of companies in the supply chain have also benefited.
Reuters Reports indicate that the U.S. Q3 earnings season will start next week. Goldman Sachs estimates, based on market forecasts, that S&P 500 company profits could rise about 27% year-over-year.
Notably, over half of this profit growth comes from companies benefiting from AI infrastructure investments, showing that AI is not just a stock price theme but is clearly contributing to earnings growth in major index companies.
. AP It reported that the U.S. stock market is nearing record highs, with the S&P 500 rising 0.7% on 5 October and just 0.3% below its previous peak, while the Nasdaq hit a new record.
This atmosphere emerges as investors await Q3 earnings, with expectations that S&P 500 profits will grow nearly 30% year-over-year. If met, this would be the third consecutive quarter with over 25% profit growth.
In simple terms, the stock market has reached high prices alongside high profit expectations, making this quarter’s results especially important—investors want to see not only profit growth but also that the growth is sustainable and linked to AI investments.
Data from Research division of Asia Plus Securities shows that CAPEX for hyperscalers continues to accelerate, with Q3 CAPEX expected to grow 116% year-over-year, up from 87% last quarter, supporting strong earnings prospects for AI supply chain stocks.
At the same time, revenues are beginning to reflect returns, as cloud businesses of giants like Amazon, Google, Microsoft, and Oracle maintain record-high backlogs and accelerate growth to 55% year-over-year from 48% in the prior quarter.
This has led to upward revisions in profit forecasts, with tech sector estimates rising about 40% over the past month, second only to energy at around 50%. Asia Plus therefore views the AI supply chain positively, especially optical, CPU & AI server, semiconductor equipment, and cloud sectors.
However, the market is growing more concerned about hyperscalers’ debt burdens despite ongoing AI investments. Credit risk is rising, with Oracle drawing the most attention due to its higher debt and leverage compared to peers.
The key issue is whether companies can sustain AI investments while seeing revenue growth keep pace, indicating that investments are starting to generate returns and support future profit growth.
Conversely, if CAPEX continues rising rapidly but AI-related revenue and profits cannot keep up, questions about AI investment returns (ROI) will increasingly pressure the market.
This is why this earnings season is not just about meeting profit growth expectations but proving that AI revenue growth is fast enough to support both investments and resulting debt. If results satisfy this, the market has reason to continue valuing AI highly.
Sources: Reuters, AP News, Asia Plus
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