Chen Guo: Philadelphia Semiconductor Index's Bear Market Deepens, Nasdaq in Danger

English summary

A historic moment for the US AI industry since ChatGPT: Microsoft almost on schedule became the first major US company to cut its AI capex, and was rewarded by the market. Moreover, it is likely not the last. As we said before, at least one CSP will miss capex. The stock price movement also showed that funds expected professional-manager-led Microsoft to cut its capex plan with the highest probability. Today the truth is revealed: $190B cut to $175B. Microsoft announced the cut after its last quarter's earnings beat expectations across the board, and the stock surged afterward. Another company, founder-led Meta, is not that stubborn either: it only raised the lower bound of its capex plan from $125B to $130B, almost equivalent to no longer raising under capital pressure. This shows an attitude: Zuckerberg cares about investment returns and market value; Meta is not Oracle. Of course, capital is still dissatisfied: Meta's free cash flow is about to turn negative at any time. Microsoft is a top student and still cut, so Meta should cut capex more significantly.