Traders work on the floor of the New York Stock Exchange during morning trading on October 14, 2026 in New York City.
Michael M. Santiago | Getty Images
Investors said this week’s headline results will be key to whether the technology’s resurgence has any traction.
of S&P500 and Nasdaq Composite Monday’s rally was mainly due to a recovery in artificial intelligence companies. iShares Semiconductor ETF (socks) The market is on pace to break out of its nine-day slump. of Magnificent Seven Like memory chip makers, it also outperformed. iShares MSCI Korea ETF (Ewai), is dominated by SK Hynix Samsung Electronics also rose 4% after plunging last week.
This comes after the S&P 500 fell nearly 2% last week, its worst weekly decline since late June. The Nasdaq Composite Index fell 4.5% over the same five-day period.
Nasdaq Composite year-to-date
Monday looked like a rebound from oversold conditions, but the bigger move will depend on this week’s results from big tech companies. Among them are meta platform and tesla — to address recent concerns about the sustainability of AI trade. space x Report after bell on Tuesday.
“Technology earnings will be key this week. Fundamentals remain unchanged, but given the fragile price movement, we keep risk assets neutral (on) and duration neutral,” said Ajay Rajadhyaksha, global chairman of research at Barclays.
Fairlead Strategies founder Katie Stockton said in a note Monday that this will be a particularly important week for the S&P 500 and Nasdaq, which need to maintain support to avoid cementing another collapse. However, for the time being, short-term oversold conditions are widespread and support may hold, he said.
S&P 500 year-to-date
profit test
Of the 47 S&P 500 companies that have reported third-quarter results so far, 85% have beat expectations, putting the market-wide index on track to post 29% headline earnings growth.
However, most of the technology-related achievements are yet to be achieved, and the hurdles to clear are high.
“Investors will need statements of evidence from companies that are considered part of an AI transaction that they can deliver on the earnings growth expectations built into their pricing,” said LNW Chief Investment Officer Ron Albahari. “We don’t have a valuation potential bubble here like we had during the Internet bubble. We have an earnings expectation potential bubble in this cycle.”
As a result, the market will take a “more discriminatory” approach to technology, which Albahari believes is a healthy move that will lead to “more dispersion of winners and losers in the AI industry.” In that environment, some AI beneficiaries may continue to grow, while others, such as neocloud platforms, may be sold off due to the amount of debt they are taking on to finance their construction, he said.
“Previously, AI headlines were driving most of the AI universe stocks up and down,” the CIO said. “I don’t think we’ll see that kind of uniformity going forward.”
As it stands, efforts in AI trade seem more like a “reality check” than a “full-scale elucidation,” said Sameer Samana of the Wells Fargo Investment Institute. But he still believes there could be more pressure in the days and weeks ahead.
“We recently downgraded tech stocks because we thought expectations had become too optimistic,” Wells Fargo’s head of global equities and real assets told CNBC.
