Wall Street has been closely watching whether major tech giants can deliver on heightened expectations through their earnings reports. Overall, these companies have largely lived up to expectations. Friday's market selloff led to weekly declines for US stocks, partly driven by Amazon.com's mixed earnings results released after Thursday's close, combined with disappointing non-farm payroll data and concerns about the economic impact of President Trump's global tariff policies. However, for investors hoping that tech companies would use their performance to support their market dominance, most companies' earnings reports still provided ample justification.

Kevin Gordon, senior investment strategist at Charles Schwab, noted: "The tech sector is demonstrating 'Teflon-like' resilience to declines, with solid fundamentals, revenue growth significantly exceeding expectations, and relatively healthy profit margins. While not without flaws and valuations approaching historical highs, we remain highly optimistic, especially about large-cap blue-chip tech stocks."

Alphabet kicked off earnings season last week, achieving strong sales growth driven by its artificial intelligence business. This week, Apple recorded its strongest revenue growth in over three years; Meta Platforms surged to record highs after beating expectations and revealing aggressive AI investment plans; Microsoft's strong cloud business performance, driven by AI demand, briefly pushed its market value past $4 trillion, making it the second company in history to reach this milestone. Its stock has risen for 10 consecutive weeks, marking the longest winning streak since 2023.

Amazon proved to be the exception, with somewhat lackluster guidance due to slowing growth in its cloud computing division and heavy AI investments.

**Valuation Pressures Emerge**

The Nasdaq 100 index fell 2.2% for the week, with declines concentrated on Friday. The Bloomberg "Magnificent Seven" index, which includes the aforementioned companies plus Tesla, declined 1.5% for the week. However, the Nasdaq 100 remains up more than 30% from its early April lows, while the "Magnificent Seven" index has gained over 40%.

These gains have prompted Wall Street professionals to question whether tech stock rallies have become overextended. The Nasdaq 100's forward price-to-earnings ratio currently sits near 27 times, well above the 10-year average of 22 times.

Overall, however, companies that have reported earnings have not shown signs of significant fundamental deterioration, which is particularly crucial given ongoing uncertainty about trade policies and tariff impacts. According to Bloomberg data, 96% of companies in the S&P 500 technology sector beat profit expectations, and 93% met revenue targets, compared to 82% and 68% respectively for the entire index.

While Wall Street has long maintained a positive outlook on large-cap tech stocks, last week's earnings disclosures further reinforced their growth potential. According to Bloomberg Intelligence data, the "Magnificent Seven's" expected earnings growth for this year has been revised upward from 21.4% a month ago to 24.2%, while revenue growth expectations have been raised from 11.5% in early July to 13.4%.

This growth rate has slowed compared to last year, when the group achieved 36% net profit growth and 14% revenue growth. However, compared to the broader market, their growth advantage remains significant: overall market earnings are expected to grow 8.9% in 2025, with revenue expected to grow 5.5%.

Michael Nell, senior investment analyst and fund manager at UBS Asset Management, stated: "Given these companies' previous growth pace and duration, the current slowdown is reasonable. We haven't observed significant deceleration that would cause concern; this simply indicates that large companies cannot maintain high-speed growth indefinitely."

**Focus on NVIDIA Earnings**

Currently, investors are closely watching NVIDIA's developments. This chipmaker at the center of the AI boom and the world's most valuable company is scheduled to report earnings on August 27. Its main competitor in AI processors, the relatively smaller AMD, will report results first on Tuesday.

For both chip companies, positive signals are already clear: major tech companies have reaffirmed their commitment to continued AI investments. Meta, Microsoft, Alphabet, and Amazon have all increased their capital expenditure plans, and Bloomberg supply chain data shows these four companies contribute over 40% of NVIDIA's revenue, making these developments a series of positive supports.

Michael Nell from UBS Asset Management noted: "AI applications are continuously being implemented, and some companies are already beginning to see actual returns, meaning investment in this field is no longer purely speculative. Of course, this doesn't mean large-cap tech stocks won't experience valuation premiums or corrections, but the technology sector's weight in the overall market is irreversibly increasing. This trend has persisted throughout my entire career, and there's currently no reason to believe it will stop here."