Wall Street Week Ahead: Alphabet, Intel results in focus for AI trade as US earnings rev up

U.S. corporate earnings season gathers steam in the coming week as Alphabet and Intel are set to offer updates that could sway the market-leading AI trade amid high profit expectations and uncertainty over the Iran war.

The S&P 500 skidded on Friday to post a weekly decline, dragged down by a steep pullback in high-flying semiconductor shares.

Still, the benchmark S&P 500 remained up about 9% in 2026, and stood 2% below its early June record high.

Increasing expectations for profit strength this year have provided ‌bedrock support for investors' enthusiasm ⁠for stocks.

Now ⁠they are counting on the second-quarter earnings season, just under way, to show the corporate profit engine is still humming along, with S&P 500 earnings projected up a whopping 26% in the period, according to LSEG IBES data.

"Headlines continue to raise anxiety and leave investors scratching their heads wondering why the market continues to reach new heights," said Michael Arone, chief investment strategist at State Street Investment Management.

"And the reason it does is because the fundamentals have been resilient, and the earnings continue to be outstanding."ALPHABET IN FOCUS FOR AI SPENDING VIEW Alphabet's quarterly report on Wednesday will command Wall Street's attention.

The Google parent, the third-largest U.S. company by market value at $4.2 trillion, can jostle indexes as one of the heavyweight "Magnificent Seven" stocks that have driven U.S. equities higher for much of the bull run that has lasted nearly four years.

The company is also an ⁠AI "hyperscaler," spending billions of ‌dollars to build out data centers and AI infrastructure.

Such AI capital spending has been at the heart of this year's market rally, driving huge gains for semiconductors and other companies benefiting from the massive outlays.

If Alphabet announces "any type of pullbacks with respect to the spending that they're forecasting ⁠around AI, you could see ripple effects across the entire AI ecosystem," said Kevin Mahn, president and chief investment officer at Hennion & Walsh Asset Management.

Results from semiconductor firms Intel and Texas Instruments take on particular significance due to the stunning rally this year in chip stocks.

The trade faltered in recent weeks, with the Philadelphia SE Semiconductor Index ending on Friday down over 20% from its late-June record high, confirming it has been in a bear market.

Still, the index remains up more than 60% in 2026; Intel shares have soared over 160%, while Texas Instruments has gained 60%.

Tepid market reactions to strong reports this period from foreign companies Samsung Electronics and Taiwan Semiconductor indicate the high expectations for the semiconductor industry.

Chip stocks have swung widely as investors questioned whether the torrid trade has run too far.

The sector's massive collective weighting in indexes means chip shares can influence the market's direction.

Leveraged products tied to the semiconductor space ‌are also "amplifying on both the upside and the downside," said State Street's Arone.Q2 REPORTS START TO FLOOD IN AS FED NEARS Elon Musk's Tesla, another Magnificent Seven company, is also set to post results in the coming week.

Other high-profile results include American Express, Philip Morris International and defense contractor RTX, with more than 80 S&P 500 companies expected to report.

Major ⁠U.S. banks kicked off the reporting season this week, posting earnings boosted by fees for advising on mergers and acquisitions and surging trading revenue.

Wall Street was still bracing for developments in the Middle East to cause day-to-day market swings, following a recent escalation of the nearly five-month-old U.S.-Israeli war with Iran.

Many investors expect the war to be relatively short-lived, but are wary that renewed tensions could boost energy prices up to levels they reached following the start of the war, inflaming inflation fears.

That is especially an issue ahead of the Federal Reserve's meeting at the end of July.

Pricing in fed funds futures indicates expectations the U.S. central bank will raise interest rates in the coming months to bring down inflation that is above the Fed's 2% annual target.

Cooler-than-expected data this week on U.S. consumer and producer prices calmed some fears the Fed could raise rates at this month's meeting.

"The macro data has painted a picture of a steady economy with some improvement in inflationary pressure," said Eric Kuby, chief investment officer at North Star Investment Management. ...