Executive summary

1. Expectations suggest this earnings season could be a blowout.
    
2. AI developments deserve close attention, particularly as they relate to the holy grail: monetization.
    
3. I’ll also keep an eye out for signs of the ever-elusive “broadening out.”
    
4. Within the consumer mosaic, credit card payment volume looms large for me.
    

Earnings season is upon us, and all signs point to a blowout. Take a look below at analyst expectations in our Chart of the month.
 

With volatile sentiment around the AI trade and valuations at fair to moderately high levels for the broad market, achieving these headline results — actually, surpassing them — is likely critical to continued momentum in U.S. stocks.

But it may very well take more than that, at least for parts of the market.

Below I walk through the three dynamics that I think matter the most this earnings season: the spend and revenue from AI, indications of stronger earnings outside AI, and the health of the U.S. consumer.

The AI checkup

What to watch:


• Capital expenditures and guidance
• Depreciation costs
• Free cash flow
• Cloud revenue
• Memory chips – customer contracts and supply expectations

We hear it almost daily: Estimates suggest that the capital expenditures of Amazon, Meta, Alphabet, Oracle, and Microsoft could reach $700 billion in 2026 alone, almost entirely as part of their efforts to build out AI infrastructure.

That’s roughly the equivalent to the 2024 level of annual spending by Canada.¹

At that kind of magnitude, each earnings season necessarily revolves around assessing whether the spend is on track, how companies are funding it, and what revenue it ultimately generates.

The details don’t just matter to the hyperscalers. They also matter to the beneficiaries of the spend; in essence, the rest of the AI trade — from the high-flying (or suddenly crashing) chip companies to the commodities embedded in the miles of data-center campuses and the utility and industrial companies that bring them to life.

Should the spend slow, the earnings of these associated companies will also slow.

And at some point soon, the hyperscalers will need to demonstrate that all of this spend has a lucrative end game. Cash flow is disappearing and depreciation costs are building. That’s why cloud revenue matters so much; it’s where the hyperscalers monetize their AI investment, with enterprise customers turning to these cloud providers for AI workflows.

The hyperscalers offer the clearest picture of the future of the AI trade, but with memory and semiconductors arguably the greatest AI beneficiaries in 2026, investors will also pay close attention to the dynamics of their cycle in addition to the health of the overall AI trade. Listen for signs that demand is durable. Pay attention to new long-term customer commitments, whether companies expect profit margins to hold up as supply increases, and any indication that more chip capacity is coming online.

Broadening out

What to watch:


• Mag 7² versus the 493³ earnings growth
• Results outside the AI trade (parse overarching trends)
   

2026 was supposed to be the year the market finally broadened beyond technology. And some believe it has, celebrating strong small-cap and emerging-markets performance.

But those headline numbers obscure reality: Within small caps, AI-related gains fueled a meaningful amount of the Q2 rally, and Korea’s and Taiwan’s semiconductor and memory names deserve much of the credit for the emerging-markets performance. 

Moreover, when we put market performance aside and focus solely on earnings results, technology remains the epicenter. In fact, during the Q1 earnings season, the hyperscalers surprised massively to the upside, suggesting that the Mag 7 hasn’t yet lost its earnings touch.

The forgotten consumer

What to watch:


• Bank consumer insights (so far, so good)
• Retailers: Volume versus prices
• Aggregated results across consumer discretionary companies
• Staples: Volumes and guidance around food prices
• Credit card payment volume

With so much of the market’s enthusiasm centered on AI, it’s easy to forget that other variables matter as well. But beyond giving us a window into the unfolding AI build, earnings also give us a view into the consumer; the pressure facing the low-income cohort (which has suffered the brunt of inflation’s force), the resilience of the high-income cohort (which has benefited from the wealth effect and kept spending aloft), and the preferences and spending patterns within both.

Bank earnings will do a lot of the heavy lifting, and results coming out yesterday and today offer perspective on the consumer’s evolving health (so far, commentary suggests consumers were more resilient than expected). Retailers will further clarify where consumers are spending money, what volume looks like relative to pricing, and consumer preferences across staples and discretionary companies.

But another piece of the consumer mosaic is Visa’s payment volume. Visa captures a large share of card spending across the income spectrum and across a wide range of goods and services. Of course, caveats apply, as always. Like retail sales, inflation can muddy the signal, and shifts in payment habits can as well (digital wallets such as PayPal and Venmo don’t necessarily diminish the value of the data, since many transactions still ride on Visa’s network, although some are funded through bank accounts or balances, instead).

Even with those limitations, Visa’s payment volume provides one of the best real-time gauges of whether the average U.S. consumer is tightening the purse strings or continuing to spend.
 

Look for this data on July 28, when Visa reports. The current read? Certainly inflation is boosting the payment volume, but thus far, we aren’t seeing meaningful deterioration — or acceleration. Which is one reason why we continue to say the consumer is resilient, but not euphoric.
 

What else I’m watching
 

So obviously earnings are all-consuming in the coming weeks. Then there’s Fed Chair Kevin Warsh and the Fed decision in late July. Will we even have a press conference if there are no task forces to announce? Just kidding. Kinda. I guess we’ll see. IYKYK.

I’ll also keep an ear open for any developments on OpenAI and Anthropic IPOs. And of course there is Iran; the market appears to assume that we aren’t looking at a return of a hot war, but the range of outcomes is, of course, wide.

On that note, a reminder. As news unfolds, I can’t help but think back to the avalanche of alarming headlines at the end of Q1 — the war, the potential economic aftershocks, the constant speculation. But the investors who stayed on course reaped the rewards of the market recovery. Food for thought.  

Explore previous editions

June 2026 | May 2026 | April 2026 | March 2026