Big Tech earnings test tech's big rotation: What to watch this week

We're coming off a busy week in markets dominated by the resurgence of war in the Middle East and a sharp sell-off in the seemingly invincible semiconductor trade.

This week, investors step into another packed five-day stretch headlined by earnings from Magnificent Seven stalwarts Alphabet ( GOOG ) and Tesla ( TSLA ) on Wednesday.

The S&P 500 ( ^GSPC ) closed out Friday down 1% for a loss of 1.5% on the week. The Dow ( ^DJI ) lost 0.8% on Friday to close the week on a loss of 0.9%. The Nasdaq ( ^IXIC ) saw the largest losses, down 1.4% on Friday and 2.9% on the week.

The US-Iran conflict is top of mind again to start the week, as fighting between the sides flares up, putting the tentative ceasefire and crude oil flows through the Strait of Hormuz at risk. Brent crude futures ( BZ=F ) rose to their highest levels since June, breaking briefly above $90 a barrel.

On the earnings front. besides the Mag Seven heavy hitters, we'll also be watching Thursday's report from Intel ( INTC ) — a check-in on the chip trade — and reports from GE Vernova ( GEV ) and Honeywell ( HON ) that should give investors a read on the industrial and power-demand side of the business.

Also critical for investors will be Wednesday's report from longtime tech major IBM ( IBM ), coming after a major sell-off following a dour letter from CEO Arvind Krishna.

Elsewhere, reports from AT&T ( T ), T-Mobile ( TMUS ), and Verizon ( VZ ) will provide investors with a check on the state of the telecom business, likely to be especially interesting after SpaceX's ( SPCX ) entrance into the market.

The packed earnings slate is balanced out by a relatively tame economic data calendar, where a sweep of index readings from S&P Global will help investors assess the state of the economy on a broad basis.

The global chip stock rout has erased more than $3 trillion in market value since June 22, much of which has flowed into the Magnificent Seven.

This week, that rotation will get a major test on both sides, with earnings reports from the buyer-side Magnificent Seven names Alphabet ( GOOG ) and Tesla ( TSLA ), and from seller-side leader Intel Corporation ( INTC ).

"Investors will be watching closely to see whether earnings can justify elevated valuations and whether the recent pullback develops into a broader correction or simply a pause in the AI-led rally," Capital.com analyst Daniela Hathorn said.

Semiconductor sales increased 79% year on year in the first quarter of 2026, up from to 38% in the fourth quarter of 2025. BNP Paribas expects the second quarter to show sales growth of 132%.

For Big Tech, data center capex from the top five hyperscalers — Microsoft ( MSFT ), Alphabet, Amazon ( AMZN ), Meta ( META ), and Oracle ( ORCL ) — is expected to grow 79% year on year in 2026 to $644 billion, and 18% year on year in 2027 to $759 billion, BNP analysts said.

But the biggest question to be answered, says LPL Financial chief equity strategist Jeff Buchbinder, is whether all that spending is good for legitimate return on investment. No longer is it enough to spend — investors want to see results.

"AI is entering a new phase. The market is moving from pricing in promise to pricing in execution," Buchbinder wrote in a note. The recent semiconductor pullback, Buchbinder said, should tell investors this transition is already underway.

"Investors should focus less on who is spending the most and more on who is generating measurable returns from those investments," Buchbinder said.

In the roughly monthlong window when the US and Iran's preliminary agreement to end the war seemed to hold, oil shipped through the Strait of Hormuz began to quickly recover.