CICC: American AI in the "Marshmallow" Era

Zhang Wenlang, Huang Yadong and Zhou Peng of the China International Capital Research Institute jointly wrote that the U.S. stock market has experienced significant fluctuations in the past two months, and this market shock has been transmitted to other regions of the world. Analysis shows that this fluctuation mainly stems from two levels: one is the direct impact of the Federal Reserve's monetary policy adjustment, and the other is market concerns about the sustainability of capital expenditures in the AI industry. It is worth noting that there is a mutually reinforcing relationship between the former and the latter. Judging from industry data, the capital expenditures of leading companies in the AI field in the United States (Microsoft, Amazon, Google, Meta, Oracle) have shown rapid growth this year. Although the growth rate is expected to decline next year, the absolute value will continue to expand. However, the current revenue prospects of AI companies are highly uncertain, operating cash flow is close to the level of capital expenditure, and some companies are forced to turn to bond issuance and financing to maintain the pace of expansion. The continued rise in U.S. Treasury yields has further amplified market concerns. How to maintain capital expenditure against the background of income fluctuations has become the focus of current capital markets. As shown in Figure 1, capital expenditures and operating cash flow of American AI companies have reached a balance.