Nowadays, investors' expectations for large-cap technology companies in the US stock market have been raised too high, to the point where even profits exceeding expectations are no longer enough to satisfy them. The earnings season of US technology giants kicked off this week, and surprisingly, although the financial performance is impressive, the market reaction is brutal.

$Microsoft (MSFT.US)$It's a great example. After the US stock market post-market trading on Wednesday (October 3), Microsoft announced its performance report for the first quarter of the 2025 fiscal year (the third quarter of 2024), easily surpassing Wall Street's expectations. Quarterly revenue was $1 billion higher than expected, with a 11% increase in net income compared to the same period last year.

However, its stock price fell by 6.05% on Thursday, as the company's outlook for the second quarter disappointed investors. The company informed investors that cloud revenue growth would slow, profit margins would decline, and expenses would increase. This caused Microsoft's stock price to suffer its worst day since October 26, 2022.

The stock price situations of Meta, apple, and Alphabet are also similar.

$Meta Platforms (META.US)$ On Wednesday, revenue and earnings per share for the third quarter exceeded expectations, even forecasting fourth-quarter revenue between $45 billion and $48 billion, with a midpoint expectation of $46.5 billion, slightly better than analysts' $46.31 billion expectation. However, its stock price fell by 4.09% on Thursday.

$Apple (AAPL.US)$ Also announced double better-than-expected revenue and adjusted earnings per share in its quarterly financial report. Apple's stock price also "collapsed" on Thursday, closing down 1.82% on Thursday.

$Alphabet-A (GOOGL.US)$ Parent company Alphabet also reported third-quarter revenue and profit that exceeded expectations after the market close on Tuesday. The company excitedly stated that its ai investments "are paying off." After rising nearly 3% on Wednesday, its stock price fell 1.9% on Thursday.

The losses in the stock prices of these large technology companies also dragged down$Nasdaq Composite Index (.IXIC.US)$, the index fell 2.76% on Thursday; furthermore, the s&p 500 index, weighted by these large enterprises, also plummeted 1.86% on the same day.

Both of these major US stock indices experienced their worst day since September 3, with the Dow Jones Industrial Average falling by 0.9%.

Was it an unexpected outcome or a technical pullback?

By analyzing the latest performance of tech giants and their stock price reactions, numerous Wall Street professionals have provided their own opinions.

Ross Mayfield, investment strategist at Baird Private Wealth Management, stated, "I believe that currently, the enthusiasm and potential of artificial intelligence are not sufficient to meet market expectations. In fact, these companies have not fully achieved the growth expected by the market."

However, some analysts remain optimistic about the large technology companies driving the stock market higher.

Solita Marcelli, Chief Information Officer for the Americas at UBS Group's Global Wealth Management, wrote in a report, "The three tech giants (Microsoft, Alphabet, and Meta) reported continued growth in artificial intelligence-related capital expenditures, supporting positive structural trends."

Similarly, Craig Johnson, Chief Market Technician Analyst at Piper Sandler, wrote in a note to clients, "Overall technical evidence remains constructive, even with recent pullbacks or moderate profit-taking, as the main stock indexes continue to trend higher."

Undoubtedly, this has brought huge burdens to large technology companies. Investors and analysts not only expect these companies to outperform expectations, but also hope that large-cap companies will continue to drive the market in the future, which depends more on the companies' growth prospects rather than just profits.

Fundamentally, large technology companies need to meet people's expectations for current performance as well as expectations for future prospects more than any other industry.

Editor/Rocky