📈This week’s tech earnings

Investors can be attracted to themes and seduced by narratives. But there’s nothing as irresistible as a line on a chart that goes up very quickly. That simple fact may help explain the magnitude of the rotation within AI-linked stocks, where investors are eager to hitch their wagons to pockets of accelerating growth driven by supply shortages that force hardware prices skyward. 

• This week, much of Big Tech will deliver quarterly results, headlined by Meta and Microsoft on Wednesday. 

• If you’re a portfolio manager who came into 2026 wanting to maintain the same amount of AI exposure while focusing on the pockets within that theme with the best improvement in prospective earnings growth, well, that likely means you’ve been lightening up on the Magnificent 7 heavyweights.

• Their size, high margins, and dominant positions in fast-growing markets have helped the hyperscalers outperform most US companies over the past decade, and that’s what allows for persistent capex outlays on such a grand scale.

• One issue? Not all of hyperscalers’ AI spending supports immediate moneymaking opportunities. A lot of compute is still used for training The Next Great Model Update, rather than to support internal products or cloud capacity that can be sold to customers.

Earnings season could serve as fuel for a rotation back into megacap tech — whether that’s thanks to its successes or the inability of these new market hot spots to live up to sky-high expectations. Look no further than Intel, which fell 17% on Friday, for an example of what happens when a parabolic rally is followed by anything less than perfect results.

The Takeaway

Hyperscalers need more “hype,” or to deliver a clear sign about their “scale,” to continue producing earnings through this spending binge.

There’s a welcome sign that the Mag 7 is poised to rebound: last week, the cohort entered (and exited) “oversold” territory, based on the 14-day relative strength index, judged to be a positive technical development. The last time the group had been this washed out, based on this metric, was after onerous tariffs kneecapped the market in April 2025.

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We’re eating more chicken than ever, which you’d think would be good news for KFC, but as the chicken wars wage on, the chain ranked worst out of 76 restaurant brands, per a new market share analysis by Barclays. The report won’t make great reading for KFC owner Yum! Brands, with its other two major brands, Pizza Hut and Taco Bell, also among the industry’s biggest market share losers. As for the restaurants gaining market share, “Mexican,” “Texan,” and “Italian” chains took the top three spots.

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Just a few years ago, B2B SaaS (“software as a service” companies that cater to HR teams, accounting teams, finance teams, etc.) was the hottest thing in venture capital. VCs poured hundreds of billions into traditional software companies, but as AI replaces software engineers and vibe-coding startups surge, venture bets on SaaS companies are facing a brutal reset. These three charts show “the Great SaaS Meltdown.”

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PlusAI is building software to enable freight trucks to drive themselves, and is set to hit the public markets in February. In our interview with CEO David Liu, he describes his vision of a future where most vehicles, commercial or not, are driving themselves.

Read our exclusive interview

• 📺 Netflix: Markets* are pricing in a 79% chance that Netflix hikes the price of its “Standard with ads” subscription plan before the end of the year. It comes at a moment when investors are rewarding streaming companies that plan to jack up prices, as seen last week when Spotify got a boost from Goldman Sachs. 

• 🤖 Optimus: While Elon Musk certainly sounded optimistic about Tesla’s Optimus robot being for sale to the public “by the end of next year,” some believers still think there’s a shot of Tesla selling a bot to the general public within 2026. Traders are still pricing in a 14% chance of that happening, even exceeding Musk’s confidence.

*Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.