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

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

Big Tech Earnings Test Tech's Big Rotation: What to Watch This Week​

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 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," Jeff Buchbinder wrote in a note. The recent semiconductor pullback 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.

The Hormuz Oil Tap is Turning Back Off​

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.

Yet over the past week, that progress has sharply reversed, according to Goldman Sachs, as the memorandum of understanding fell apart and the ceasefire gave way to days of fighting between the US and Iranian militaries, the latest being this weekend's renewed exchanges.

"Markets had initially expected flows to normalize following the US-Iran memorandum of understanding signed on 17 June," said Lu Ming Pang, vice president of gas & LNG research at Rystad Energy. "However, those expectations have failed to materialize, and the latest escalation has further reduced the likelihood of a near-term recovery."

After falling to near zero in the early days of the war, flows through the strait had recovered to roughly 10 million barrels per day in early July. As of July 15, those levels had fallen back near 3 million to 5 million barrels per day, with further losses ahead, per Goldman Sachs strategists led by Daan Struyven. The setback now leaves the oil market short 13.4 million barrels per day of oil from the Gulf, the strategists said.

That's driven oil prices back into a sharp hike upward. As of Friday afternoon, futures on Brent crude (BZ=F) had gained roughly 15% through the week, pushing the international benchmark contract back above $87.50 a barrel. Those on US benchmark WTI crude picked up roughly 14% to trade above $81.

"As confidence in the security of the Strait continues to erode, markets will increasingly need to price in the prospect of more prolonged supply disruptions," Pang added.

The Greenback Gets a Bid​

The US dollar (DX-Y.NYB) has had a strong start to the year, thanks to booming foreign demand for US tech stocks and a more hawkish Fed.

But even with it up roughly 2.5% against a basket of other major currencies, Bank of America believes it has more room to run in the second half of 2026.

The bank's FX desk sees three primary drivers for dollar outperformance: conflict in the Middle East, the AI boom, and a higher-for-longer interest rate outlook.

First, the war in Iran and the closure of the Strait of Hormuz are set to keep geopolitical tensions high and oil prices — which are priced in dollars — higher.

Second, the dollar is set to benefit from a boom in foreign demand for US equities, as investors outside of the US have rushed for access and exposure to the country's tech sector.

The final piece of the puzzle is BofA's "well out-of-consensus call" on interest rates. Bank of America forecasts the Federal Reserve will hike interest rates by 25 basis points three times in 2026, whereas the market is only pricing in one hike. If rates do end up 75 basis points higher, that's likely to be good for the dollar.

Economic and Earnings Calendar​

Monday

Economic data: No notable economic data.

Earnings calendar: Steel Dynamics (STLD), Ryanair, W.R. Berkley Corporation (WRB), Crown Holdings (CCK), Wintrust Financial Corporation (WTFC), Domino's Pizza (DPZ), AMC Entertainment Holdings (AMC)

Tuesday

Economic data: ADP weekly employment change, week ended July 4 (+19,750 previously); Philadelphia Fed non-manufacturing activity, July (-25.8 previously)

Earnings calendar: Novartis AG (NVS), Charles Schwab (SCHW), Danaher Corporation (DHR), Chubb (CB), Capital One Financial Corporation (COF), 3M Company (MMM), Northrop Grumman (NOC), General Motors (GM), MSCI (MSCI), Interactive Brokers Group (IBKR), EQT Corporation (EQT), Halliburton Company (HAL), KeyCorp (KEY), Equifax (EFX), Ally Financial (ALLY), Hasbro (HAS)

Wednesday

Economic data: MBA mortgage applications, week ended July 17 (-2.7% previously)

Earnings calendar: Alphabet (GOOG), Tesla (TSLA), Philip Morris (PM), GE Vernova (GEV), Texas Instruments (TXN), IBM (IBM), AT&T (T), ServiceNow (NOW), CSX Corporation (CSX), Moody's Corporation (MCO), Equinor ASA (EQNR), CME Group (CME), Kinder Morgan (KMI), United Rentals, (URI) TE Connectivity (TEL), Westinghouse Air Brake Technologies Corporation (WAB), Waste Connections (WCN), Northern Trust (NTRS)

Thursday

Economic data: Initial jobless claims, week ended July 18 (212,000 expected, 208,000 previously); Continuing claims, week ended July 11 (1.808 million expected, 1.805 million previously); Chicago Fed national activity index, June (-0.1 previously); Kansas City Fed manufacturing activity, July (13 expected, 11 previously)

Earnings calendar: Intel Corporation (INTC), Nestlé S.A. (NESN.SW), RTX Corporation (RTX), T-Mobile US (TMUS), Thermo Fisher Scientific (TMO), SAP SE (SAP), TotalEnergies SE (TTE), Union Pacific Corporation (UNP), Blackstone (BX), Lockheed Martin (LMT), Comcast (CMCSA), Freeport-McMoran (FCX), Norfolk Southern (NSC), Honeywell International (HON), Digital Realty Trust (DLR), Comfort Systems USA (FIX), PG&E Corporation (PCG), Teck Resources (TECK)

Friday

Economic data: S&P Global US manufacturing PMI, July preliminary reading (54.5 expected, 53.9 previously); S&P Global US services PMI, July preliminary reading (51.5 expected, 51.2 previously); S&P Global US composite PMI, July preliminary reading (51.6 expected, 51.9 previously); New home sales, month-on-month, June (+4% expected, -7.3% previously); Kansas City Fed services activity, July (5 previously)

Earnings calendar: American Express (AXP), NextEra Energy (NEE), Verizon Communications (VZ), HCA Healthcare (HCA), SLB N.V. (SLB), Charter Communications (CHTR), Tenet Healthcare Corporation (THC), Booz Allen Hamilton (BAH), Lamb Weston Holdings (LW), Gentex Corporation (GNTX), Liberty Global (LBTYA)

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

Earnings results from Alphabet and Tesla headline a busy week, amid a chip sell-off and a conflict in Iran that keeps geopolitics simmering and oil prices rising.

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