Alphabet, Intel Earnings Crucial for AI Trade as US Season Ramps Up

As the United States corporate earnings season gathers pace, the upcoming financial results from technology giants Alphabet (GOOGL) and Intel (INTC) are set to play a pivotal role in determining the trajectory of the artificial intelligence (AI) trade. With high profit expectations and recent volatility in the tech sector, these reports could significantly influence market sentiment.

Alphabet, Google's parent company, is expected to release its second-quarter 2026 earnings on July 22 or 23, with Wall Street's attention focused on signals regarding AI-related capital expenditures and Google Cloud growth. The company's projected annual capital expenditure of $180 billion to $190 billion for this year, roughly double last year's $91.4 billion, will be closely scrutinized. Statements from Alphabet CEO Sundar Pichai on AI investments and the company's “full-stack approach” will be key to understanding its growth strategy.

Semiconductor giant Intel is also facing similar AI-driven expectations, with its second-quarter 2026 results anticipated on July 23. According to Visible Alpha consensus, Intel's Q2 revenue is forecast to reach $14.4 billion, a 12% year-over-year increase. Specifically, revenue from the Data Center and AI (DCAI) segment is projected to climb 42% year-over-year to $5.6 billion, driven by investments in AI infrastructure and custom processors. The company's earnings per share are expected to be $0.21, a notable improvement from a loss of $0.10 in the prior-year quarter.

The results from these companies will test whether AI spending justifies current technology valuations. Recent declines, including a 2.9% drop in the Nasdaq Composite and a nearly 10% fall in the Philadelphia Semiconductor Index, representing a 20% decline from its record high, reflect market apprehension regarding current tech stock valuations. The rising cost of building AI infrastructure, which has increased by approximately 20% due to surging memory chip prices, power equipment, and skilled labor shortages, is also a concern for investors.

The broader US earnings season paints a strong picture, with S&P 500 earnings projected to increase by 25.7% to 26% in the second quarter. However, geopolitical risks, such as tensions in Iran, and expectations of further interest rate hikes by the Federal Reserve (Fed), are adding to market uncertainty. AI investments continue to be a significant driver for mega-cap technology firms like Alphabet, Amazon, and Meta Platforms, boosting their profits.

Analysts will closely monitor Alphabet's guidance on AI capital expenditures for signals about the strength of AI demand. For Intel, the focus will be on its ability to maintain relevance for its legacy semiconductor franchises while funding a capital-intensive turnaround and accelerating free cash flow amidst intense competition. Many analysts express skepticism, questioning whether the astronomical valuations driven by AI investments are justified, citing concerns that AI adoption timelines might be longer and competitive dynamics more intense than initially expected.