Big Tech earnings test the AI rally

U.S. stocks closed lower on July 20 as investors shifted from broad enthusiasm around AI to scrutiny of earnings, margins and guidance. Alphabet, Tesla and Intel are due to report this week, with the market testing whether AI spending can translate into revenue and profits while elevated oil prices and Treasury yields pressure growth valuations.

Chip stocks attempted a rebound after a pullback, but momentum faded. The Philadelphia Semiconductor Index gained more than 3% intraday before closing up just about 0.6%, while Nvidia rose roughly 1.4% to $205.71. Morgan Stanley argued that AI data center demand could keep memory supply tight through 2028, with prices potentially increasing by at least 25% from Q2 to Q3 2026.

AMD gained attention from Microsoft’s plan to deploy the AMD Helios AI platform and next-generation EPYC processors in Azure for AI inference, while its “Advancing AI 2026” event is expected to provide more detail on roadmaps and demand. Nvidia remains dominant in training, high-end GPUs and software, but cloud providers are also building custom chips including Microsoft Maia, Google TPU and Amazon Trainium.

Intel faces the week’s most consequential test after a year-to-date rally and ahead of Q2 results. The company must show revenue, margin and foundry progress as CPUs regain importance in inference and agentic AI workloads, though its foundry unit remains pressured by operating losses and limited external customer revenue.