Tesla takes the lead, "The most important financial report of the US stock market" is coming, the AI frenzy and the long bull market in technology will reveal their true colors.

In the coming weeks, the seven major technology companies that have dominated the US stock market this year will release their financial reports one after another. This will be the key factor determining whether the bull market recovery in the US stock market can continue.

Since the beginning of this year, the stock prices of the seven giants, namely Apple, Microsoft, Alphabet-C (the parent company of Alphabet-C), Amazon, Nvidia, Tesla, and Meta, have soared by 40% to 200%, becoming the main driving force behind the nearly 18% increase in the S&P 500 index this year, as recognized by investors.

Among them, Tesla will be the first to release its financial report after the market closes next Wednesday.

Such significant increases in stock prices often come with high market profit expectations. The "seven giants" need to demonstrate strong performance to justify the high premiums given to them by the market.

According to data from Bank of America, the overall price-to-earnings ratio of these companies is about 40 times, while the price-to-earnings ratio of the other constituents of the S&P 500 index, excluding these companies, is about 15 times. At the same time, Bank of America's average expectation for the future 12-month earnings growth of the "seven giants" is 19%, more than twice the profit expectation for the other constituents of the S&P 500 index, which is 8%.

Bill Callahan, an investment strategist at Schroders, said that investors are not only concerned about second-quarter performance, but also about performance guidance and future expectations.

Tajinder Dhillon, a senior research analyst at Refinitiv, said that overall, these seven companies account for 14.3% of the overall expected profits of the S&P 500 index constituents in the second quarter, and 9.3% of the expected revenue.

Next week, companies such as Microsoft and Meta will also release their financial reports. It is expected that investors will pay close attention to the progress of these technology companies in the field of AI.

Thomas Martin, Senior Portfolio Manager at Global Investments, said that although the benefits brought by AI may not be immediately reflected in each company, investors are eager to learn "more about how to convert it into cash flow." Martin added:

"It takes time for it to take effect and show results. During this process, people hope to see some progress."

Yung-Yu Ma, Chief Investment Officer of BMO Wealth Management, said that although the valuation of mega-cap stocks "has largely been priced in," it does not mean that they are overvalued:

"Once you consider trends like artificial intelligence, their position shifts from being core holdings in a portfolio to being almost essential components of a portfolio."