Tech Bounce Faces Big Earnings Test From Meta, Tesla — SkimNews
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- S&P 500 and Nasdaq Composite rallied Monday on an AI rebound, with the iShares Semiconductor ETF (SOXX) on pace to snap a nine-day slump, a bounce that followed the S&P 500's worst week since late June (down nearly 2%) and Nasdaq's 4.5% five-day decline.
- The Magnificent Seven and memory chipmakers outperformed, while the iShares MSCI South Korea ETF (EWY) — dominated by SK Hynix and Samsung Electronics — surged 4% after steep prior declines.
- Meta Platforms and Tesla report earnings this week, with SpaceX due after Tuesday's bell, giving investors their first chance to vet AI-exposure valuations after weeks of selling.
- Of the 47 S&P 500 companies that have reported Q3 so far, 85% beat expectations, putting the index on track for a blended earnings growth rate of 29%, per the article.
- Ron Albahary, CIO at LNW, warned the market will take a "more discriminating" approach to AI stocks and flagged an "earnings-expectation-potential bubble," with neocloud platforms particularly vulnerable to debt taken on for AI build-outs.
- Wells Fargo's Sameer Samana called the current action more of a "reality check" than a "full-blown unraveling" of the AI trade, but said pressure could persist through the midterms due to the politicization of AI and data centers.
- Barclays' Ajay Rajadhyaksha turned neutral on risk assets citing "fragile price action," while Fairlead Strategies' Katie Stockton said widespread short-term oversold conditions suggest S&P 500 and Nasdaq support can hold for now.
Why it matters: With 85% of early Q3 reporters beating expectations and the index tracking 29% blended earnings growth, the bar for this week's heavy tech slate is high: any AI-trade company that can't deliver a "proof statement" risks a sharper selloff in the more discriminating market Albahary describes, accelerating the winner-vs-loser split within the sector.
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