Wall Street awaits strong earnings to sustain AI rally after recent selloff

The AI trade entered earnings season under pressure after a sharp selloff in semiconductor stocks—the very companies that powered the sector's gains earlier this year. Memory chip makers like Micron and SanDisk, described as "the golden child of this AI revolution" by analysts, have tumbled into bear-market territory, signaling investor concern that enthusiasm has outpaced fundamentals. The market's anxiety centers on a fundamental mismatch: hyperscalers have committed to spend $650 billion（約100兆円） on AI infrastructure this year, a massive capital commitment driven partly by competition and rising equipment costs (as evidenced by Taiwan Semiconductor's capex hike), yet investors lack clear evidence that these investments will generate proportional returns. This earnings season will test whether that narrative changes. Alphabet's Wednesday report arrives as the opening bell for Big Tech's earnings, carrying outsized significance because these hyperscalers form the foundation of the entire AI ecosystem. If their results demonstrate strong monetization of AI spending rather than just capex growth, it may restore confidence and halt the recent rotation out of the sector. If earnings disappoint or merely show rising costs without commensurate revenue gains, the market may view this as confirmation that the AI capex cycle has run ahead of real business returns.