US Stock Trend (July 23): Alphabet Cash Flow Turns Negative Raising Concerns, Super Micro Computer Rises Nearly 20% Against the Trend

By: TechFlow Research

The three major indices closed slightly lower on Wednesday, with the Nasdaq leading the decline at 0.57%. Oil prices surged to a six-week high, with WTI settlement prices up 2.95% and Brent up 3.36%. AI server system stocks surged against the trend, with Super Micro Computer jumping nearly 20% and Dell Technologies rising over 9%, marking the largest single-day gain since June. After-hours earnings reports from tech giants were released sequentially. Tesla's earnings per share were $0.33, far below the market expectation of $0.51, and the pace of capital expenditure also lagged significantly behind the target set by Musk. Alphabet's revenue and cloud business growth both exceeded expectations, but it recorded negative cash flow for the first time in history this quarter, sparking investor concerns over signs of accelerated cash burn.

Market Performance

The Nasdaq fell 0.57%, the S&P 500 fell 0.14%, and the Dow Jones fell 0.01%.

Super Micro Computer surged nearly 20%, and Dell Technologies rose over 9%, marking the largest single-day gain since June 2. The AI server system sector became the strongest main theme of the day. SpaceX fell over 6%, hitting a new low since its listing.

WTI crude oil settlement price rose 2.95%. Brent crude oil settlement price rose 3.36%. COMEX gold rose 1.46%, reporting $4135.9/ounce. COMEX silver rose 1.35%, reporting $59.99/ounce. Bitcoin opened at $66,508.87 on Wednesday, up 2% compared to Tuesday. It once approached $67,000 during the session before falling back, oscillating throughout the day in the range of $65,500 to $66,900. Ethereum opened at $1,928.62, up 1.3%.

After-hours earnings reports from tech giants were released sequentially. Tesla's Q2 revenue was $28.24 billion, up 26% year-over-year, exceeding the market expectation of $26.32 billion; earnings per share were $0.33, below the market expectation of $0.51; capital expenditure was $5.789 billion. At this pace, the full year would be approximately $17 billion, below the $25 billion target set by Musk.

Alphabet's Q2 revenue was $119.8 billion, up 24% year-over-year; Google Cloud business revenue increased 82% year-over-year to $24.8 billion; the company also raised its full-year capital expenditure expectation to between $195 billion and $205 billion, recording negative cash flow for the first time in history this quarter.

Macro and Outlook

The most glaring part of Tesla's report card was not revenue, as revenue itself actually exceeded expectations; the problem lies in profitability and the pace of investment. Earnings per share were significantly below market expectations, indicating that cost-side pressure is greater than outsiders thought. The pace of capital expenditure is an even bigger hidden danger. Calculated at the current spending speed, it is very likely that the full-year target previously set by Musk will not be met. This directly makes people doubt whether the company can move forward according to plan on new projects such as humanoid robots. Management stated that Optimus at the Fremont factory will start production later this year, but the market obviously wants to see evidence of real financial investment; a promise on the timeline is no longer weighty enough.

Alphabet's problem has shifted to another dimension. The growth rates of revenue and cloud business are both beautiful; the 82% year-over-year increase for Google Cloud can even be called brilliant. However, all this good news was overshadowed by the bad news of cash flow. For the first time in history, the company recorded negative cash flow for a single quarter, while also pushing up the cap for full-year capital expenditure. It is equivalent to spending money faster than earning it while making money. How long this cash-burning pace can last has become an unavoidable topic in the funding circle in the coming days.

The company also disclosed an equity arrangement, planning to issue up to $40 billion of Class A and Class C stock through market transactions.

The counter-trend surge of AI server system stocks on the day happened to respond to this concern from another angle. The surge in Super Micro Computer and Dell indicates that there is no problem with the orders themselves; the AI hardware business is still a good business. It is just that capital is now being more selective, willing to pay for visible and tangible hardware orders, but questioning the cloud cash-burning model with an unclear return cycle.

On the same day, several news items added evidence to this logic. OpenAI plans to spend over $30 billion to build new data centers and raised its cloud expenditure expectation to $750 billion. Anthropic plans to purchase up to 2 gigawatts of AMD's latest generation chips starting from the first half of 2027. Microsoft also signed a data center cooperation agreement with Mistral on a scale of billions of dollars. The capital flow of the entire industry is becoming increasingly picky.

Regarding geopolitics, Trump made harsh words on social media, warning that once Iran fires on passing ships in the Strait of Hormuz, the US side will target a bridge or power plant in Iran. Iran did not intend to show weakness either. Foreign Minister Araghchi appeared to make a statement on the day, summarizing Iran's position as "I will not attack unless attacked; if attacked, I will certainly counterattack," implying that if domestic infrastructure is struck, the response will not be small.

This round of verbal sparring directly pushed up the geopolitical risk premium of crude oil, which is an important background for the surge in oil prices on the day.

TechFlow Perspective

The market's tolerance for AI-related companies has now become very small. Simple revenue growth is no longer a bonus. Investors want to see whether capital expenditure can be exchanged for tangible cash flow returns. This standard is more than an order of magnitude harsher than a few months ago. Tesla stumbled on execution, and Alphabet stumbled on the speed of spending. The pitfalls the two companies stepped into are different, but the logic of punishment given by the market is consistent.

The surge in Super Micro Computer and Dell provides a reverse footnote. Also on the main line of AI hardware, companies doing hardware business with high order visibility are instead sought after. The long-term promises drawn by cloud vendors are not selling so well now. Whether this trade-off can continue depends on whether the earnings reports of several cloud vendors in the future can produce more reassuring capital return data.

The fact that oil prices hit a six-week high will continue to constrain market sentiment in the short term. As long as the posture of remote verbal confrontation between Iran and the United States does not de-escalate, the geopolitical premium of crude oil will be difficult to dissipate. This will also continue to put pressure on tech stock valuations through the two paths of inflation expectations and US Treasury yields.

The key in the coming days is to see whether the earnings reports of more tech giants disclosing capital expenditure details can give the market a more reassuring answer.