🔍 Read the full analysis: A Closer Read On The AI Boom: Six Numbers Before Big Tech Reports on ThorstenMeyerAI.com
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TL;DR
SK hynix reported preliminary third-quarter operating profit of 83.3 trillion won, while Microsoft and Alphabet were due to report later on October 28 and Amazon on October 29. The figures show strong chip and memory profits, but earnings are concentrated and major cloud companies’ AI spending has yet to show clear payback in cash flow.
SK hynix reported a record third quarter on Wednesday, with operating profit of 83.3 trillion won, as investors waited for Microsoft and Alphabet to report later October 28 and Amazon on October 29. The contrast captures the central question before the cloud companies’ results: chipmakers are recording extraordinary profits, but it remains unclear whether the large sums invested in AI infrastructure will generate comparable returns.
SK hynix said third-quarter revenue reached 104.6 trillion won, up 328% from a year earlier, while operating profit rose 632% to 83.3 trillion won. The company’s preliminary results put its operating margin at 80%. Net profit, however, fell 58% from the previous quarter to 39.8 trillion won, which the source account attributed to non-operating items. The figures are preliminary and unaudited.
The company also said long-term agreements with 14 major customers cover more than half its planned capacity for 2027 and 2028. SK hynix expects demand for its products to exceed supply through 2030; that is the company’s forecast, not an established outcome. It announced a 14 trillion won dividend and a 20 trillion won buyback this quarter and plans about 100 trillion won in shareholder distributions during 2026. The source account notes that half of the buyback is allocated to employee compensation.
Other indicators tell a less uniform story. FactSet estimated S&P 500 third-quarter earnings growth at 29.5% as of October 23. Its October 19 analysis found that removing Micron and Nvidia would reduce the estimate from 29.0% to 20.0%. Meanwhile, Alphabet, Amazon, Microsoft and Meta have indicated combined 2026 capital spending of roughly $725 billion to $745 billion, a total calculated by the source author from company guidance. Analysts expect Alphabet and Amazon to report negative free cash flow for the third quarter again, according to the source account.
Infographic 01 · The boom in numbers
Record profits, narrow growth, rising bills.
Six numbers from company releases, FactSet and the Census Bureau, before Microsoft, Alphabet and Amazon report.
Who carries the earnings boom
Q3 2026 earnings growth, year over year. Blended: reported results plus estimates.
The Wall Street Journal (Dow Jones Market Data) puts the two chipmakers at 34% of the expected growth. Top five contributors per FactSet: Micron, Nvidia, Meta, EchoStar, Boeing.
What the buyers plan to spend in 2026
Capital spending guidance, US dollars. Bars show the top of each range.
Q3 consensus: Alphabet free cash flow −$2.3B on $55.2B capex; Amazon −$9.9B on $58.7B. Definitions differ slightly (Microsoft includes finance leases).
Shovel seller
- Revenue 104.6 trillion won, +328%
- Long-term deals cover >50% of 2027–28 capacity
- About 100 trillion won back to shareholders in 2026
Real economy
- Core capital goods orders +10.9% this year
- Computer orders +20.3% this year
- Census data do not label AI; semiconductors excluded from orders
Debt nerves
- Cost to insure Meta’s debt +177% this year, Amazon’s +129%
- Oracle: $117B long-term debt, rated BBB-
- Off-balance-sheet leases don’t show up as debt (S&P)
Sources: SK hynix 3Q26 release, 28 Oct 2026 (preliminary); FactSet, 19 Oct 2026; Alphabet Q2 call, 22 Jul 2026; Amazon via CNBC, 30 Jul 2026; Microsoft via CNBC, 29 Jul 2026; Meta Q3 release, 21 Oct 2026; FactSet consensus via CNBC, 27 Oct 2026; US Census Bureau, advance durable goods report, 27 Oct 2026. Capex sum and bar scaling: Thorsten Meyer.
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AI Profits Meet Their Funding Test
The results matter because AI investment is now large enough to shape earnings expectations across major technology companies and the wider market. Record sales of high-bandwidth memory and other chips show that suppliers are benefiting from data-center demand. But supplier profits do not establish that the companies building those data centers will earn enough from AI services to cover their costs.
The concentration of expected earnings growth adds another risk for investors. FactSet’s calculation still shows 20% S&P 500 growth after excluding Micron and Nvidia, a substantial increase, but the difference between that figure and the headline estimate shows how much the two firms affect the aggregate. The coming reports will offer evidence on whether cloud revenue is keeping pace with spending, and whether investment is being financed by operating cash or other means.
The source also points to signs of activity beyond technology companies: US shipments of core capital goods rose 1.2% in September, and orders for computers and related products were up 20.3% this year, citing Census Bureau data published October 27. Those measures suggest investment is reaching the broader economy, but they do not by themselves show that AI projects will earn an adequate return.
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A Split Across AI Markets
The source’s October 28 preview describes a sharply divided market. SK hynix shares rose during the Seoul session after its results, while China’s STAR50 index had fallen 40% since July, according to Reuters reporting dated October 26. The source says that decline erased about $480 billion in value, while the index remained near 100 times past earnings. The comparison illustrates differing market outcomes, but it does not establish that either market’s valuation or direction will persist.
SK hynix makes high-bandwidth memory, a type of stacked memory used alongside AI processors in data centers. Its reported results are a measure of current business performance, while the company’s longer-term demand outlook is a forecast. The distinction matters: strong present sales can coexist with uncertainty about future supply, customer demand and returns on the infrastructure being built.
The source’s other earnings figures are estimates rather than completed results. FactSet’s blended growth measure combines reported results with estimates for companies that had not yet reported. The source also notes that some companies among the leading contributors, including Meta, EchoStar and Boeing, faced one-time charges in the year-earlier period, which can affect growth comparisons.
“Demand will exceed supply through 2030.”
— SK hynix
Returns, Guidance and Market Direction
The central unknown is the return on AI infrastructure spending. The source says analysts expect negative free cash flow again at Alphabet and Amazon for the third quarter, but the companies’ actual results and explanations were not yet available when the preview was written. Microsoft’s and Alphabet’s reports were due later October 28, with Amazon following October 29.
It is also uncertain how much of the announced spending will be made in 2026, how quickly new capacity will be used, and what portion of cloud growth is directly tied to AI. The source gives a combined capital-spending range derived from company guidance; it is not a single forecast issued by the four companies together. SK hynix’s expectation that demand will exceed supply through 2030 and the earnings-growth estimates for companies yet to report should likewise be read as projections.
The source material describes this as a preview and says a dated update would be added once the reports were out, but it contains no post-report update. This article therefore does not state what Microsoft, Alphabet or Amazon ultimately reported.
Three Reports, Four Metrics
Microsoft and Alphabet were scheduled to publish quarterly results on October 28, followed by Amazon on October 29. The source recommends watching four items: capital-spending guidance; cloud growth compared with that spending; free cash flow and how investment is funded; and management comments on capacity.
Those disclosures will help investors compare new AI-related revenue with the cost of building and operating data centers. Management forecasts may clarify planned investment, but they will not settle the longer-term question of whether AI services can sustain the current pace of spending. The source’s preview provides no confirmed results or subsequent market reaction for those reports.
Key Questions
What did SK hynix report?
It reported preliminary, unaudited third-quarter revenue of 104.6 trillion won and operating profit of 83.3 trillion won. The company said operating profit was 632% higher than a year earlier.
Why are Microsoft, Alphabet and Amazon’s results relevant?
The companies are among the major planned spenders on data centers and other AI infrastructure. Their reports can show whether cloud growth, free cash flow and management’s capacity plans are keeping pace with that investment.
How concentrated is the S&P 500 earnings-growth estimate?
FactSet estimated third-quarter S&P 500 earnings growth at 29.5% as of October 23. In a separate calculation dated October 19, it said excluding Micron and Nvidia would lower the estimate from 29.0% to 20.0%. These are estimates, not final results.
Does SK hynix expect AI memory demand to stay strong?
Yes. SK hynix said it expects demand to exceed supply through 2030 and reported long-term agreements covering more than half of its 2027 and 2028 capacity. The demand outlook is the company’s forecast, not a confirmed future outcome.
What remains unknown after this preview?
The source material does not include the results from Microsoft, Alphabet or Amazon. Their reported revenue, spending, free cash flow and updated guidance—and the eventual returns on AI investment—remain unknown in this account.
Source: ThorstenMeyerAI.com
