Wall Street will get its first health check on Big Tech
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Investors will get their first look into how Big Tech companies are faring on Wednesday, with Google-parent Alphabet , Tesla , IBM and ServiceNow set to report after the bell. Expectations heading into both reports are high, with analysts on average estimating year-over-year earnings growth of more than 25% for Alphabet and Tesla. IBM and ServiceNow are forecast to see slight profit expansion from a year ago, LSEG data shows. This season has already proven that Wall Street is willing to re-rate stocks lower if corporate reports disappoint — or even if they're not "good enough." IBM reflects this. The company last week released preliminary results that were below analyst's consensus for Q2 . That led to the stock's worst day on record, down 25% on July 14. IBM 3M mountain IBM 3-month chart This backdrop makes these reports important beyond the single-stock level. "Earnings are micro events because the specifics of a company's margin are idiosyncratic to its operations. But sometimes a batch of earnings comes together that represents a notable effect on the broader macro economy. Such is today," wrote Ben Emons, CIO and founder of FedWatch Advisors. Emons pointed out that the combined market cap of Alphabet, Tesla, IBM and ServiceNow is around $6 trillion, or roughly 21% of U.S. GDP. "Strong prints from Alphabet or Tesla would confirm that AI capex is propagating through upstream industrial supply chains, and why the correlation with physical AI and hyperscalers with these stocks is rising, he said. "IBM and ServiceNow earnings may show that downstream software adoption and services revenue are already stabilizing, giving further lift to the beaten-up memory and software sectors." To be sure, if the results disappoint — or investors aren't satisfied with them — then that could put pressure on a market that's already on edge. Stocks fell in early trade Wednesday, weighed down by higher oil prices as tensions between the U.S. and Iran continue to rise. The S & P 500 has also failed to make a new all-time high since early June. Will this upcoming batch of earnings reports help the benchmark reach new heights again? Or will it dampen expectations around the artificial intelligence trade and put more pressure on the broader market?