Tech dramas, rather than the Iran war, will be the earnings season focus

In an uncertain world, investors will get a welcome dose of clarity this week as the quarterly flurry of earnings reports starts in earnest.

Large financial firms line up to issue results first, with luminaries like Goldman Sachs (Monday) and JPMorgan Chase, BlackRock, Wells Fargo and Citigroup (all Tuesday) headlining the first two days of festivities.

As the largest US bank by assets — and the only non-tech company to crack the top 10 biggest S&P 500 earners — JPMorgan will get a fair bit of attention when it reports before the open on Tuesday.

Wall Street will, of course, be focused on its top and bottom lines: diluted Q1 earnings per share ($5.44) is expected to grow by about 7%, and revenue ($49.13 billion) by 8.4%, according to FactSet.

But investors will also be keen to see if the company has been able to rake in a more respectable share of the fees Wall Street has collected from blockbuster bond deals financing the AI building boom. (Last quarter, JPM’s investment banking fee revenue came in short of expectations.)

Such commercial concerns seem almost quaint compared to the last six weeks, when the Iran war whipsawed stocks and pushed the Nasdaq, Russell 2000, and Dow into corrections.

But whether the coming crop of earnings results is considered a bonanza or a bust will have less to do with the war in Iran and more to do with the updates on the ongoing AI boom, and what it means for the tech stocks that remain the overwhelming source of growth for the market.

The S&P 500 information technology sector includes familiar tech giants — foremost among them Nvidia, Microsoft, and Apple — that have dominated the market for most of the current decade. But other tech shares that are in the S&P’s communications services sector, including Meta, Amazon, and Alphabet, are also massive contributors to the market’s earnings power.

The top 10 stocks — all tech, except for Exxon — account for about 35% of the profits generated by the entire S&P 500, per FactSet. And for the most part, they won’t report results until late April, and in some cases, May. (Why, Nvidia? Why?)

These tech goliaths aren’t looking particularly expensive at the moment. Nvidia, for example, is essentially trading at 20x expected earnings over the next 12 months, near its lowest levels in the last decade. The same could be said for Microsoft.

Why? Some think low valuations reflect concerns that these former asset-light, cash-generating giants are unlikely to make a profit on the hundreds of billions of dollars — an expected $600 billion in capital expenditure this year alone — they’re pouring into AI.

Such unresolved questions will make any updates on capex plans or forecasts for free cash flow (perhaps the cleanest read on profitability that includes the impact of investment costs) of particular interest to the market.

And given their massive weight in market cap-based indexes like the S&P, these shares will be crucial determinants of how the next few weeks go. But beyond that, the big spending by hyperscalers matters massively to the rest of the market.

Goldman Sachs analysts estimate that AI investment spending will account for roughly 40% of S&P 500 earnings-per-share growth in 2026.

All of the biggest S&P 500 gainers so far this year are companies that, basically, have been selling their stuff to be used in the big AI build-out.

That includes memory plays like Sandisk, Western Digital, and Seagate Technology Holdings as well as fiber-optic networking companies like Lumentum, Ciena Corp., and Corning. Lesser-known players like Teradyne — which makes equipment to test AI hardware — and data center construction and engineering firms Vertiv Holdings and Comfort Systems USA are also toward the top of the list of index winners in 2026.

Any indication that the breakneck pace of growth for these companies — or for memory stocks like Sandisk, any signs of a slowdown in soaring prices — could generate outsized moves.

Another key drama playing out in tech is whether software companies — which were first battered by AI worries, then snapped up as a source of reliable cash flows amid the war, and since the ceasefire, dumped yet again — can convince Wall Street they’re not doomed to obsolescence in an AI future.

So far this year, it’s been an uphill battle.