Corporate earnings confirmed this week what markets have been nervous about for a while: even strong results aren’t enough if AI spending keeps climbing without a clear payoff. Alphabet and Tesla both topped revenue expectations, but their stocks fell anyway after each company said it would spend noticeably more on AI this year than previously planned. IBM and ServiceNow faced similar skepticism. Intel broke that pattern overnight, posting its strongest quarterly growth in years on real demand for its AI-related chips, and its stock jumped sharply in response. The takeaway: investors are rewarding companies that can show AI spending is already turning into sales and are pushing back on those still asking for patience.
Tensions in the Middle East have added to the pressure on tech and chip stocks this week, with the U.S. carrying out new airstrikes on Iran and oil prices moving higher. It’s a reminder that markets are currently juggling several crosscurrents at once: earnings that hinge on AI spending, a Federal Reserve still in wait-and-see mode, and unpredictable global headlines.
Despite all that noise, the ground underneath the market has stayed remarkably solid. Weekly jobless claims fell to their lowest level since 1969, a sign that companies are still holding onto workers. A preliminary read on July business activity also hit an 8-month high, though the survey noted prices rose at their fastest pace in nearly four years. This is another reminder that the inflation fight remains far from finished. The Fed’s key rate remains steady, with the next meeting not until July 29th, and consumers are still spending at a healthy pace, even as housing remains the one soft spot. In other words, the headlines are noisy this week, but jobs, business activity, and Fed policy continue to hold up relatively well.
Interesting to Note
Astronomers announced this week that they’ve found the first confirmed atmosphere around a rocky planet sitting in another star’s “habitable zone,” the range of distance where temperatures could allow liquid water to exist. The planet, called LHS 1140 b, sits about 48 light-years from Earth. It’s an early but exciting step in the search for worlds that might support life beyond our solar system.
Looking Ahead
Microsoft and Meta report earnings Wednesday, followed by Apple and Amazon on Thursday, rounding out results from five of the seven “Magnificent Seven” companies this earnings season.
The next FOMC meeting is July 28th-29th, where markets will get an updated read on the Fed’s rate path.
Have a nice weekend!
Written by: Chris Wasson, CFP®
Sources:
Yahoo Finance – Google Drops on Capex Concerns
FXStreet – Tesla and Alphabet Results Round Up
CNBC – Intel Q2 2026 Earnings Report
CNN – Jobless Claims Lowest Since 1969
S&P Global – Flash US PMI, July 2026
Axios – Retail Sales and Consumer Resilience, June
Motley Fool – Magnificent 7 Earnings Preview
ScienceDaily – First Atmosphere Found on Habitable-Zone Rocky World
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