[US Stocks This Week] Massive AI Investment, 5% Interest Rates, Rising Oil Prices—High-Tech Revaluation and Capital Diversion to Energy

Conclusion for this week

• Change: The massive scale of AI investment has sparked concerns over monetization, leading to a sharp pullback in high-tech stocks, led by semiconductors.

• Significance: While high-growth cloud demand continues, the expansion of capital expenditure and cash burn is prompting a revaluation of valuations.

• Guidance for next week: We want to confirm the progress of revenue and margins relative to AI investment amounts, a halt in semiconductor selling, and the persistence of long-term interest rates near 5% and rising oil prices.

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The 3 Major Themes of the Week

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Theme 1 | Revaluation of Semiconductors and Large-Cap Tech Due to Massive AI Capital Expenditure 🔴 [Caution/Market Headwinds]

[Fact] What happened

• 🔴 [Caution] Amazon disclosed a 2026 cash capital expenditure outlook of approximately $220 billion. While AWS revenue was strong at 39.3% year-over-year growth, concerns over the payback period for AI investments and cash burn have resurfaced.

• 🔴 [Caution] Alphabet recorded $51.4 billion in capital expenditure for the third quarter, totaling $132 billion for the first nine months of the year. It significantly expanded investments in data centers and servers.

• 🔴 [Caution] On October 30, the NASDAQ Composite fell 2.86%, and the semiconductor index fell 7.2%. NVIDIA was down 4.2%, AMD down 10.9%, and Intel down 28.6%.

• 🔴 [Caution] The weekly performance of the NASDAQ Composite was -2.00%. It underperformed the S&P 500’s -0.57%, with notable declines in large-cap growth stocks centered on AI and semiconductors.

Source: https://www.bls.gov/ces/

[Deep Dive] Why it matters (Insight)

It is not that AI demand has stalled. Rather, as AWS’s growth rate shows, demand for cloud and AI computing resources remains strong. What the market has begun to question is not “is there demand,” but “how much will be invested to capture that demand, and when can it be recovered?”

The expansion of capital expenditure by hyperscalers is a medium- to long-term tailwind for GPUs, networking, data center equipment, and power infrastructure. On the other hand, the rapid increase in investment amounts could pressure free cash flow, profit margins, and the capacity for shareholder returns. For AI-related stocks that have already priced in high growth expectations, phases where they are sold off if capital expenditure plans exceed expectations are likely to continue.

This week’s sharp decline is not the end of the AI theme, but a signal that the AI market has shifted from a “revenue growth story” to a “phase of selecting for investment efficiency and profit recovery.”

[Company] Notable Related Stocks

• Amazon (AMZN): AWS revenue grew 39.3% year-over-year, indicating strong AI and cloud demand. Meanwhile, the outlook for approximately $220 billion in cash capital expenditure will be a key verification item for investment recovery and cash flow.

• Alphabet (GOOGL): Recorded $51.4 billion in Q3 capital expenditure, accelerating investment in AI infrastructure. The focus is on whether the monetization of search, cloud, and generative AI will match the scale of investment.

• NVIDIA (NVDA): A direct beneficiary candidate of hyperscalers’ increased investment. However, it fell 4.2% on October 30, revealing profit-taking pressure on high-expectation AI semiconductor stocks.

• AMD (AMD): Down 10.9% due to sector-wide risk aversion, despite benefiting from the expansion of competition in AI semiconductors. It is crucial whether increased demand leads to improved profit margins.

• Intel (INTC): Fell 28.6% after disclosing its Q4 outlook, amplifying the sell-off in semiconductor stocks. It is necessary to distinguish between company-specific performance issues and sector-wide valuation adjustments.

[Read More] Related articles to deepen your understanding of the theme

▼ [Patent & Financial Analysis] (AMZN) Decoding the direction of technological development and financial performance from patent publications (Multifaceted confirmation of AI investment recovery through Amazon’s technological development and financial results)

▼ <<Premium Grade>> [2026 Edition] The next top stock for AI semiconductors targeting glass core substrates x TGV—Selecting AMKR and ONTO based on earnings figures (Selecting the implementation and substrate themes spreading across the base of AI semiconductors based on earnings figures)

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Theme 2 | Strong growth and sticky inflation constrain FOMC rate cut expectations 🔴 [Caution: Market Headwinds]

[Fact] What happened (Fact)

• 🟡 [Neutral] The FOMC kept the federal funds rate target range at 3.75–4.00%. The vote was 10-2, with Governor Cook and President Hammack advocating for a 25bp rate hike.

• 🔴 [Caution] Q3 real GDP accelerated to a 3.4% annualized growth rate, and real private domestic final demand increased by 4.9%. The strength of demand reduces the urgency for monetary easing.

• 🔴 [Caution] The September PCE price index rose 0.5% month-over-month and 3.6% year-over-year. Core PCE also rose 0.3% month-over-month and 3.1% year-over-year, indicating persistent price pressures.

• 🔴 [Caution] The Q3 Employment Cost Index rose 0.8% quarter-over-quarter and 3.4% year-over-year. WTI crude oil futures also reached $104.12 over the weekend, up 0.82% for the week.

• 🟢 [Positive] Due to demand for safe-haven assets, the US 10-year Treasury yield fell 6bp from 5.00% at the start of the week to 4.94%.

Source: https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?field_tdr_date_value=2026&type=daily_treasury_real_yield_curve

[Insight] Why it matters (Insight)

In the current US economy, the central issue for the market is not growth deceleration but the “coexistence of strong demand and price pressure.” The more robust GDP and private demand are, the less reason the Fed has to rush into rate cuts. Furthermore, if PCE, employment costs, and oil prices all trend upward simultaneously, concerns about re-accelerating inflation will intensify.

Although the US 10-year Treasury yield fell during the week, 4.94% remains a high level. In an environment where long-term interest rates stay near 5%, growth stocks, whose share prices depend on profit growth in the distant future, are more susceptible to the impact of rising discount rates. This interest rate environment is also the backdrop for the amplified concerns regarding AI investment recovery in Theme 1.

The point of focus is whether the decline in bond yields represents “relief over inflation cooling” or “demand for safe-haven assets due to stock market risk aversion.” If it is the latter, a decline in interest rates will not necessarily act as a tailwind for the stock market as a whole.

[Company] Notable related stocks

• SPDR S&P 500 ETF (SPY): The S&P 500 was down 0.57% for the week, reflecting risk aversion in the latter half of the week and interest rate/inflation concerns across the broader stock market.

• Invesco QQQ Trust (QQQ): Has a high ratio of large-cap growth stocks and is sensitive to both interest rates and AI investment concerns. As indicated by the NASDAQ’s 2.00% weekly decline, adjustment pressure has intensified.

• iShares 20+ Year Treasury Bond ETF (TLT): A candidate for relative benefit in phases where long-term bond yields decline due to a preference for safe-haven assets. However, if inflation reignites, interest rate hike risks remain.

• Energy Select Sector SPDR Fund (XLE): While rising oil prices act as a tailwind for earnings, a reignition of inflation due to high energy costs acts as a headwind for the market as a whole.

[Read More] Related articles to deepen your understanding of the theme

▼ Part 2 | Sector Rotation Strategy—Predicting the ‘Next Industry’ in the Business Cycle | Perfect Map (Learn the perspective of incorporating changes in interest rates and economic phases into sector allocation)

▼ 《10/8 Tonight’s US Stock Strategy》 Simultaneous Observation of Small-Cap Weakness, Rising Oil Prices, and Rising Interest Rates—Will the Combination of Indices and Interest Rates Continue in the Next Observation? (Auxiliary lines for grasping the correlation between interest rates, oil prices, and stock indices)

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Theme 3 | Energy Gains Relative Advantage Due to Rising Oil Prices and Expanding Refining Margins 🟢 [Positive Sentiment/Market Tailwind]

[Fact] What happened (Fact)

• 🟢 [Positive] WTI crude oil futures closed at $104.12 per barrel on October 30, with a weekly gain of 0.82%. It reached $104 during trading hours.

• 🟢 [Positive] The NYSE Energy Sector Index rose 1.3% as of the afternoon of October 30, and XLE rose 1.7%. Energy gained a relative advantage during a phase of intensified tech selling.

• 🟢 [Positive] Exxon Mobil and Chevron hit record highs during trading hours following earnings news supported by expanding refining margins.

• 🔴 [Caution] While rising oil prices are a tailwind for energy company earnings, they bring the risk of widespread inflation reignition through transportation costs, manufacturing costs, and consumer prices.

Source: https://home.treasury.gov/interest-rates-data-csv-archive/

[Insight] Why it matters (Insight)

The strength of energy stocks this week is not merely a reaction to rising oil prices. As the long-term recovery story for AI investment is being re-evaluated, it shows that investors have begun to diversify capital into sectors that possess current cash flow, pricing power, and shareholder returns.

Integrated oil majors are in a phase where their strength in having both upstream and downstream revenue sources is easily recognized, as not only oil prices but also expanding refining margins boost profits. When capital moves from a concentration in technology to resources and value, energy can serve as a portfolio diversifier.

However, prolonged high oil prices are a double-edged sword for the market as a whole. Even if they are a positive factor for energy companies, they can push up inflation expectations, narrow the Fed’s policy room, and squeeze consumption. It is necessary to determine whether the rise in energy is a ‘healthy rotation’ or a ‘sign of inflation anxiety’.

[Company] Notable Related Stocks

• Exxon Mobil (XOM): Recorded a record high during trading hours against the backdrop of expanding refining margins. The integrated model that can capture both oil prices and downstream earnings attracted attention.

• Chevron (CVX): Recorded a record high during trading hours along with XOM. High levels of oil prices and refining profitability supported expectations for earnings power.

• Energy Select Sector SPDR Fund (XLE): Rose 1.7% on October 30. It functioned as a sector diversification destination while selling in semiconductors and large-cap tech intensified.

[Read More] Related articles to deepen your understanding of the theme

▼ [Earnings Analysis] V / Visa FY2026 Q4: GAAP Net Income and Net Revenue increased, with growth in transaction volume and cross-border volume (Confirming the ripple effects of inflation and the economy on corporate earnings through consumption and payment data)

▼ [Earnings Analysis] Macy’s FY2026 Q2, GAAP diluted EPS is $0.62, Comparable sales up 2.7% (Considering consumer resilience under rising prices through the earnings of consumer-related companies)

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The most worth-reading deep dive this week [Hero Deep Dive]

The biggest focus this week is not the strength of AI demand, but how companies can convert the massive investments required to capture that demand into revenue, profit margins, and cash flow. While Amazon maintains high growth in AWS, it has indicated a capital expenditure outlook of approximately $220 billion. To identify the next winners in the AI market, one must read both technological competitiveness and financial strength simultaneously.

▼ [Patent/Financial Analysis] (AMZN) Understanding the direction of technological development and financial performance from patent publications

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3 key points to watch next week

• 1. Hyperscaler investment recovery capability: We want to confirm whether capital expenditures by companies like Amazon and Alphabet are accompanied by improvements in cloud revenue, profit margins, and free cash flow, such as in AWS.

• 2. Spread and stabilization of semiconductor sell-offs: We will closely watch whether the price movements of the semiconductor stock index, NVIDIA, AMD, and Intel stabilize, and whether the AI-related sell-off spreads from individual factors to revisions in profit outlooks for the entire sector.

• 3. Re-coupling of interest rates, oil, and FOMC expectations: We will track the movement of the US 10-year Treasury yield around 5%, the stabilization of WTI crude oil around $104, and changes in FOMC policy expectations following PCE and wage inflation data.

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Sources for this week’s facts

The following are the search sources included in the raw data for this report. Please verify the factual descriptions for each theme against the “Source” lines in the main text.

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Reference Information & Sources

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Disclaimer: This article is for informational purposes only and does not recommend or solicit the buying or selling of specific financial products or investment actions. Please make final investment decisions based on your own judgment and responsibility.