Alphabet's second-quarter earnings release on July 22 will be a key focus for US stocks during the week of July 20-24, as investors assess the company's AI capital expenditure plans amid concerns over the semiconductor sector's profitability. The Philadelphia Semiconductor Index fell 9.97% last week and declined 18.06% this month, entering what analysts describe as a bear market with losses exceeding 20% from recent highs. Investor anxiety centers on whether hyperscalers' large-scale AI infrastructure investments can generate substantial returns, with Alphabet's capital spending guidance for 2025 drawing particular attention. Concurrently, escalating US-Iran military exchanges pushed Brent crude prices up 15.91% last week, raising inflation concerns that could pressure equity markets if the conflict persists.
Alphabet Reports Q2 Earnings on July 22
Alphabet will release its second-quarter earnings on July 22. The company provided 2024 capital expenditure guidance of $180 billion to $190 billion, approximately double its 2023 spending of $91.4 billion. Mark Mahaney, head of internet research at Evercore, forecasts Alphabet will present 2025 capital expenditure guidance of $275 billion to $325 billion. Mahaney stated that Alphabet will express confidence in the re-acceleration of cloud business growth rates. He said people are looking for positive data points related to AI and expects they will receive them. IG, a global online financial services company, identified key metrics to monitor: Google Cloud growth rate, Tensor Processing Unit (TPU) monetization, Gemini enterprise customer expansion, AI capital expenditure, and search advertising growth. Market participants are also watching the background behind Alphabet's postponement of its next-generation AI model "Gemini 3.5 Pro" launch.
Philadelphia Semiconductor Index Declines 9.97% in One Week
The Philadelphia Semiconductor Index, which groups semiconductor and artificial intelligence stocks, fell 9.97% last week and dropped 18.06% this month. Concerns over the profitability of hyperscalers' AI investments relative to spending have been identified as a core factor applying downward pressure on the semiconductor sector. Questions are growing about whether large-scale capital expenditures can lead to actual revenue generation. China's AI model "Kimi K3" received evaluations that its performance is comparable to the top-tier models of Claude and ChatGPT, further dampening investment sentiment toward AI and semiconductor stocks. This raised the possibility that US AI companies could fall into a negative cycle of "profitability deterioration → investment reduction" due to the rise of Chinese AI models emphasizing cost-performance ratios.
Intel Releases Q2 Earnings on July 23
Semiconductor company Intel will release its second-quarter earnings on July 23. Investors are focusing on the growth of AI accelerator and data center businesses, progress in foundry operations, and second-half earnings outlook.
US-Iran Military Exchanges Drive Oil Prices Up 15.91%
The US conducted airstrikes on Iran throughout the previous week. Iran also carried out retaliatory measures targeting US military bases in the Middle East region. Two US soldiers were killed in the process. Online media outlet Axios reported that the US is sending dozens of aerial refueling aircraft to Israel, suggesting the US may choose full-scale war again as it considers long-range airstrikes. Iran's Supreme Leader Ayatollah Seyyed Mojtaba Khamenei stated in a statement that the US continuously violated the Memorandum of Understanding (MOU) and warned they would "give the enemy an unforgettable lesson." Brent crude for September delivery surged 15.91% last week due to the conflict between the two countries. Chris Low, chief economist at FHN Financial, stated that if Middle East tensions lead to rising oil prices, the trend of slowing inflation could be reversed.
S&P Global US Manufacturing PMI Scheduled for July 24
There are few notable economic indicators this week. The S&P Global US Manufacturing PMI, scheduled for July 24, is considered the most significant indicator. Investors can assess US manufacturing conditions through this indicator. Federal Reserve officials have entered a "blackout period" ahead of the Federal Open Market Committee (FOMC) meeting scheduled for July 28-29, refraining from statements on monetary policy.
FAQ
What is Alphabet's capital expenditure guidance for 2024?
Alphabet provided 2024 capital expenditure guidance of $180 billion to $190 billion, approximately double its 2023 spending of $91.4 billion.
How much did the Philadelphia Semiconductor Index decline last week?
The Philadelphia Semiconductor Index fell 9.97% last week and declined 18.06% this month, with losses exceeding 20% from recent highs.
How much did Brent crude prices increase last week due to US-Iran tensions?
Brent crude for September delivery surged 15.91% last week due to the conflict between the US and Iran.
