AI hardware stocks declined once again, with Delton Technology (Guangzhou) Inc. (01989) falling 7.85% to HK$68.05 as of press time, CIG (06166) dropping 7.24% to HK$69.85, ZJ INNOLIGHT (03308) slipping 6.94% to HK$730.5, and YOFC (06869) losing 6.18% to HK$104.7.
On the news front, Google parent Alphabet (GOOGL) reported third-quarter results that missed expectations on both revenue and profit. In the third quarter, Alphabet's capital expenditure came in at $51.4 billion, below the market forecast of $55.8 billion. Even with more restrained capex, the company's free cash flow remained negative at $9.1 billion, marking a second consecutive quarter of negative free cash flow, while the market had expected negative $3.5 billion. In addition, Alphabet's borrowing surged sharply in the third quarter, with long-term debt climbing to $125.1 billion from $21.6 billion a year earlier, an increase of about 479%.
Founder Securities previously noted that the continued expansion of capex by cloud vendors has been an important support for this round of AI hardware market performance, but rising investment scale and stock price gains do not always move in sync. Whether the market expectation that the growth rate of cloud vendors' capex is peaking proves valid may have significant guiding meaning for the sustainability of future AI hardware stock performance.
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