Can markets handle more strait talk?
SPY•Earnings and AI spending remain in focus
While geopolitical tensions and inflation fears simmer, markets are also keeping an eye on earnings from tech bellwethers Alphabet GOOGL.O and Tesla TSLA.O to gauge if the vast capital spending from AI hyperscalers is finally beginning to yield results.
The Google-parent reported its best-ever quarter of growth for its cloud computing unit, but that was not enough to satisfy investor appetite as the focus moved to higher capital spending plans for the year. The search giant now expects to spend between $195 billion and $205 billion, up from $180 billion to $190 billion.
That spells good news for Asian chipmakers, most of whom may end up pocketing billions to build that infrastructure. South Korea's KOSPI .KS11 rose nearly 4%, led by SK Hynix 000660.KS and Samsung Electronics 005930.KS. European futures STXEc1 point to a muted open so the mood may darken soon as investors return to fretting about valuations, profit growth and returns on huge capital spending.
More earnings this week will provide a clearer picture of where we stand in the profitability vs capital spending tug of war.
