Bullish outlook on Google earnings and AI ad monetization

This week is the last full trading week before the midterm elections and represents the most critical test for the tech sector. In terms of earnings, besides the three major cloud giants, Samsung and SK Hynix, the two leading Korean memory chipmakers, will also release their earnings this week. Looking at the timeline: SK Hynix on Wednesday, followed by after-hours earnings for Google and Microsoft; then Samsung Electronics, Amazon, Intel, and SanDisk on Thursday. At 2:00 AM Wednesday, the Federal Reserve will announce its interest rate decision, followed by Governor Waller's press conference at 2:30. With these events concluding, Friday brings month-end fund rebalancing, so market volatility is expected to be high this week. There are many things the market needs to verify: First, whether demand in the memory sector maintains its prosperity. Second, how much of the massive AI spending has actually translated into revenue and profit. This is what the market is most concerned about and is the key question that the three cloud giants—Google, Microsoft, and Amazon—must answer. Currently, the market has different expectations for these three companies. For Microsoft Azure and Amazon AWS, growth rate expectations are 45% and 37%, respectively. Notably, in the options market, Google's earnings day volatility is priced at approximately ±6.4%. The core reason is that Google's stock price has been suppressed for too long, and the market hopes for a decent performance from Google. Besides cloud services, Google's advertising business and TPU revenue will also be focal points for the market. Google's stock has seen significant pullbacks, primarily driven by concerns that AI would impact its search advertising business. For this earnings report, the market wants to see if Google's AI products can achieve notable improvements in ad conversion rates like Meta did, and what kind of revenue TPU generates. The current market consensus for Google Cloud's growth rate is 89% (up from 82% last quarter), with two major banks giving expectations above 90%: Bank of America predicts 93%, and JPMorgan predicts 100%. Compared to the previous quarter, market expectations for the earnings of these three cloud giants are not particularly high. As long as the growth rates of the three cloud giants slightly exceed market expectations and capital expenditure levels are reasonable, there will be grounds for the market to re-buy tech stocks. On interest rates, it has become a consensus that the Fed will not raise rates in October. There will be no dot plot this time. The Nasdaq 100 forward P/E ratio is close to its low point from last April, and QQQ's pullback is nearing July levels (near the annual moving average). The rebound in July began with big tech earnings coinciding with the FOMC meeting. This time, it is again big tech and the FOMC. Please give the bulls some sugar.