According to Zhitong Finance, large-cap tech stocks have recently been heavily sold off, causing the Nasdaq 100 index to drop by 8% in just two weeks, teetering on the edge of a significant pullback. Whether it can avoid this uncertain milestone may depend on the earnings reports of four companies with a combined market value of nearly $10 trillion this week. Investors will welcome earnings from Microsoft (MSFT.US), Apple (AAPL.US), Amazon (AMZN.US), and Meta Platforms (META.US) this week, along with the latest interest rate decision from the Federal Reserve.In the first half of this year, large-cap tech stocks surged, leading to overvaluation of these large companies. Last week, Alphabet (GOOGL.US)'s earnings raised concerns in the market that spending on artificial intelligence has become too heavy relative to short-term returns. Meanwhile, Tesla (TSLA.US)'s earnings announced last week also failed to boost investor confidence.Michael O'Rourke, Chief Market Strategist at Jonestrading, said, &#34;These earnings are really important. If you can't exceed expectations, then I think it means that artificial intelligence hasn't performed as people hoped.&#34;After a long period of hype, investors are finally cautious about companies at the forefront of artificial intelligence. For the past few months, investors have been ignoring warnings about the excessive valuations of these companies. Recently, investors' selling off has caused the Nasdaq 100 index to lose $2.6 trillion in market value, with funds pouring into underperforming stocks with long-term potential, including small-cap companies, financials, and industrials. The Nasdaq 100 rose slightly on Friday, up 1%, but not enough to offset the earlier losses this week.US June inflation data showed a cooling off, leading the market to bet that the Federal Reserve may cut interest rates as early as September, marking the start of a cyclical shift in market funds. Since then, the Russell 2000 index has risen by 10%, while financial and industrial stocks in the S&amp;P 500 have gained over 3.5%. The future direction of US stocks will also be influenced by the prospect of rate cuts when the Federal Reserve releases its policy statement on Wednesday and Chairman Powell speaksDuring this rotation of the uptrend, traders have been buying options on the Invesco QQQ Trust Series 1 ETF, which tracks the Nasdaq 100 Index, to prevent further declines, pushing the premium of put options to the highest level in 8 months. The Chicago Board Options Exchange's VIX volatility index broke 18 for the first time since April, while a similar indicator measuring the volatility of the Nasdaq 100 Index hit its highest level since October last year - corresponding to the last time the index saw a pullback.Michael Matousek, Chief Trader at US Global Investors Inc., said: &#34;When the market breadth is so narrow and everyone relies on the same few stocks, this situation occurs.&#34;The first earnings test this week will be Microsoft, the software giant that has been integrating artificial intelligence services into its suite of software products and investing heavily in data center capacity; in the third quarter ending in March this year, Microsoft spent $11 billion on capital expenditures, a figure expected to exceed $13 billion in the fourth quarter. Companies like Meta and Amazon, which will announce earnings, have also been heavily investing in AI, and investors will be looking for signs that their artificial intelligence is driving revenue growth. Apple has planned to integrate AI services into the iPhone, and with the market optimistic about the company's plans, Apple's stock price has risen 32% from its low point in April, with investors looking for more details when the financial results are announced.James Abate, Chief Investment Officer at Centre Asset Management, said: &#34;More and more people are worried that the return on investment in large-scale artificial intelligence spending will further decline, or not be as lucrative as imagined, which is affecting the entire semiconductor chain and all stocks related to artificial intelligence.&#34;In some of the highest-priced artificial intelligence stocks, heavy selling is intensifying: NVIDIA (NVDA.US) is a leading company in the industry, and since surpassing Microsoft and Apple to become the world's most valuable company on June 18, the company's market value has dropped 17% from its all-time high; Dell Technologies (DELL.US), which produces servers for data centers, has fallen 37% from its peak in May, while its competitor Super Micro Computer (SMCI.US) has dropped 40% since March.<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20240729/1722210087851209.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="6d29fe4fab61f1199b1412329bf44ed.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20240729/1722210087851209.png"/>Of the 14% increase in the S&amp;P 500 Index in the first half of the year, the six major US tech stocks contributed the most. Since 1999, the market-cap-weighted index has outperformed its equal-weighted index by the most. Valuations of tech giants have soared, with the S&amp;P 500 Information Technology Index hitting its highest expected price-to-earnings ratio since 2002 earlier this month.Abate said: &#34;The pricing of large tech stocks is perfect, as it accounts for almost all of the market's gains, but this precisely highlights the vulnerability of the group.&#34;

MSFT

Recently, the Nasdaq 100 index fell by 8%, with technology stocks being sold off as the market remains cautious towards artificial intelligence companies. The financial reports of companies like Microsoft, Apple, and others, as well as the interest rate decisions of the Federal Reserve, will impact the trend of technology stocks. Investors are starting to buy stocks of small companies, financial, and industrial companies. The market anticipates a possible rate cut by the Federal Reserve in September. Traders are paying attention to the Fed's policy statement and Chairman Powell's speech. The Nasdaq 100 index has slightly rebounded, but the decline has not been fully recovered

The Fed meeting joins forces with Microsoft and Apple earnings reports! Whether tech stocks can stop falling depends on this week