Our prediction at the beginning of the year regarding the five major software tech giants—slowing revenue growth, increasing capital expenditures, and EPS growth being squeezed from both ends—has finally come true, albeit a bit late.

In this wave of earnings reports from the tech giants, apart from Netflix's weak forward-looking guidance, the issues in the reports from Google and Microsoft are largely the same—slowing growth in core businesses or decelerating growth guidance, while capital expenditures uniformly accelerate under the Fear of Missing Out (FOMO) investment mindset. Microsoft is particularly extreme, with a single quarter's capital expenditure hitting $19 billion (Google's was $12 billion).

If these giants continue investing at this pace and scale, and given the rapid iteration speed of AI computing products, the depreciation cycles of these servers may shorten. If next year the AI revenues of these cloud giants fail to quickly match the rising depreciation costs, the giants will almost certainly see deteriorating profits.

At least in the short term, Azure, currently the primary beneficiary of AI computing in the cloud, has shown a year-over-year slowdown in growth rather than the expected acceleration. This serves as an ominous sign for the giants facing high capital expenditures next year. "Too much spent, too little to compensate" has become the core logic behind the recent sell-off of internet and software giants.