Alphabet, Intel earnings test AI trade as U.S. reporting season accelerates

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Alphabet, Intel earnings test AI

Highlights

Alphabet's upcoming report Wednesday will be closely watched for signals on potential changes to AI-related capital expenditure, potentially impacting semiconductors and broader AI equities.
The Philadelphia SE Semiconductor index is up 68% in 2026, with Intel surging over 160% and Texas Instruments climbing 68%, underscoring the sector's heavy influence on major indexes.
Escalating U.S.-Israeli tensions with Iran are raising concerns about a rebound in energy prices and inflation, while Fed funds futures point to likely interest rate hikes in coming months.

Big Tech and chip results shape market outlook

As reported by Reuters, quarterly updates from Alphabet and Intel are among the most closely watched events in the coming week as Wall Street tests whether earnings can justify elevated valuations and sustain momentum in the AI-driven rally.

The S&P 500 is lower for the week as of Thursday but remains close to record highs after gaining 10% in 2026. According to LSEG IBES data, S&P 500 earnings are projected to rise 25.7% in the second quarter, reinforcing investor focus on whether corporate results continue to support the market despite geopolitical uncertainty.

Alphabet's report on Wednesday is expected to draw particular attention because the Google parent is both a heavyweight in the "Magnificent Seven" and a major AI infrastructure spender. Investors are watching for any indication that the company could scale back planned AI-related capital expenditure, a move that market participants say could have ripple effects across semiconductors and other parts of the AI ecosystem.

Chipmakers Intel and Texas Instruments are also in focus after a sharp advance in semiconductor shares this year. Although the trade has weakened in recent weeks, the Philadelphia SE Semiconductor index remains up about 68% in 2026, while Intel has surged more than 160% and Texas Instruments has gained 68%.

War, inflation and rates add pressure to earnings season

Tepid market reactions to strong results from Samsung Electronics and Taiwan Semiconductor underscore how high expectations have become for the semiconductor industry. The sector's large weighting in major indexes means chip stocks can still have an outsized effect on broader market direction, while leveraged semiconductor products are amplifying moves on both the upside and downside.

Tesla is also due to report in the coming week, alongside American Express, Philip Morris International and RTX, with more than 80 S&P 500 companies expected to release results. The breadth of reports is likely to give investors a wider view of whether profit resilience extends beyond the largest technology names.

Markets are also staying alert to developments in the Middle East after a recent escalation in the nearly five-month-old U.S.-Israeli war with Iran. Investors are concerned that renewed tensions could push energy prices back toward levels seen after the war began, adding to inflation worries at a sensitive moment for monetary policy.

That concern is especially relevant ahead of the Federal Reserve's meeting at the end of July. Fed funds futures indicate expectations that the U.S. central bank will raise interest rates in the coming months, although cooler-than-expected U.S. consumer and producer price data this week have eased some fears of a move at this month's meeting.

Our earlier coverage of the pullback in AI-linked chip and tech stocks explained how investors began questioning stretched valuations and unwinding leveraged positions after a strong rally. We also noted that even robust results and aggressive spending plans from major semiconductor players, alongside rising oil prices and inflation concerns, were no longer enough to lift sentiment and instead amplified volatility across the sector.

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