From the recent financial reports of Meta, Microsoft, and Google, they are all continuously expanding capital expenditures, fully investing in AI.

But the market is very tense about these giants

1. Insufficient Capex investment, worrying that companies will fall behind the times and fail to deliver high valuation growth.

2. Capex investment exceeds expectations, but if profits don't keep up, then ROIC declines, doubts arise about the revenue AI can generate, efficiency in making money decreases, and high valuations can't be justified, even leading to valuation cuts.

3. Only companies selling shovels (infrastructure providers) are seeing real revenue growth, real supply shortages, but there are also concerns about the sustainability of this growth.

The crux of the matter lies in whether downstream profits can surpass Capex and achieve further growth, but it will take time for these investments to translate into revenue.

At any time this year, the financial reports of these giants, even if they meet or exceed expectations in all aspects, will still be punished by the market due to high Capex and profit growth not keeping up. But if the AI narrative is true, then in the long run, it's actually a discounted sale. If you believe in the company's AI and cloud businesses, you can buy on dips. Until the performance is truly realized, or the bubble bursts.

Therefore, in 2026, continuing to buy shovel stocks is a higher-probability bet. Amid repeated doubts about downstream manufacturers increasing Capex, we have to face the repeated performance delivery, upgrades, exceeding expectations, and supply shortages of various shovel stocks.

Even if there are concerns about sustainability, the market will be forced to buy due to the undeniable performance, and once downstream revenue and demand are confirmed, it will reflect on the shovel stocks.

Not investment advice, just some thoughts on recent financial reports.$Intel(INTC.US) $AMD(AMD.US)$Taiwan Semiconductor(TSM.US) $Sandisk(SNDK.US)  $Microsoft(MSFT.US) $Amazon(AMZN.US) $Meta Platforms(META.US) $Alphabet(GOOGL.US) $Alphabet - C(GOOG.US)