A pullback in AI-linked shares is testing investor confidence as Wall Street turns to quarterly results from Meta Platforms, semiconductor companies and others. S&P 500 companies are expected to increase third-quarter earnings by more than 30%.
AI-linked stocks struggled in recent days, including sharp declines in semiconductor and technology hardware shares. The S&P 500 posted its biggest weekly drop since June but remained about 2% below its record high set this month; healthcare and consumer staples gained during the week.
Meta Platforms is among the key companies reporting next week, alongside Lam Research and Texas Instruments. Investors are looking for signs that hyperscalers’ profits can grow faster than their capital spending; five major AI hyperscalers are expected to spend about $1.2 trillion combined next year, according to Goldman Sachs.
Tesla, SpaceX, Netflix, Procter & Gamble and GE Aerospace are also due to report. Rising Treasury yields and hot inflation data have increased bets on another Federal Reserve rate increase, although futures pricing suggested most investors expected the Fed to wait until December.
