As AI rally wobbles, stock market's spotlight turns to earnings
SPY•Investors will watch results from Meta Platforms, semiconductor companies, SpaceX and Tesla next week as recent declines in AI-linked stocks test confidence in the rally. S&P 500 companies are expected to post third-quarter earnings growth of more than 30%, while five AI hyperscalers are expected to spend about $1.2 trillion combined next year.
1. AI stocks lose momentum
AI-linked stocks struggled in recent days, with sharp declines in semiconductor companies and technology hardware firms. The S&P 500 posted its biggest weekly drop since June, though it remained about 2% below its record high set this month. Healthcare and consumer staples gained during the week.
2. Meta results in focus
Meta Platforms is among the key companies reporting next week, as investors look for evidence that hyperscalers’ profits can grow faster than their spending on AI infrastructure. Five AI hyperscalers are expected to increase combined capital spending to about $1.2 trillion next year, according to Goldman Sachs. Meta shares have risen in recent weeks after the company launched its Muse AI assistant.
3. Other reports and rate concerns
Lam Research and Texas Instruments report Wednesday, offering potential indications of semiconductor demand. SpaceX, Tesla, Netflix, Procter & Gamble and GE Aerospace are also scheduled to report. Treasury yields and prospects for further Federal Reserve rate hikes remain concerns for stock investors.
