S&P 500 Rises 0.7% as Investors Await Big Tech Earnings and Weigh AI Funding Risks

Key Facts

The S&P 500 rose 0.7% in Monday’s session on October 26, recouping more than its losses from the previous week and moving within 1.8% of its record high, set earlier in the month, according to the Associated Press. The Dow Jones rose 0.3% and the Nasdaq gained 0.8% in a rebound ahead of a busy week for major corporate earnings. But the gains did not dispel investor concerns about AI stocks, which remained volatile after weeks of sharp moves. The concerns center on the cost of borrowing needed to build data centers and buy chips as companies seek to expand their computing capacity. The market’s test therefore extends beyond demand for cloud services to companies’ ability to finance that expansion and generate returns from it.

The rebound comes as about one-third of S&P 500 companies prepare to report quarterly results during the week, according to the Associated Press. Alphabet and Microsoft are scheduled to report on Wednesday, followed by Amazon on Thursday, putting the performance of their cloud computing and AI businesses in focus. As of October 26, about one-quarter of index companies had reported results, and nearly 83% of them had exceeded expectations, while aggregate earnings growth topped 30% year over year, according to estimates cited by Investing.com. Yet earnings indicators alone are no longer the focus of evaluation; an analysis by the site said investors are paying greater attention to the intensity of capital spending, cash flow and return on investment, rather than simply whether earnings per share beat estimates. That makes companies’ disclosures about spending and their ability to turn it into revenue and cash flow a central part of assessing this week’s results.

At Amazon, CEO Andy Jassy said the company is struggling to keep up with “insatiable” demand from AI labs and companies for Amazon Web Services infrastructure, according to a Reuters report cited by Fidelity. Jassy said the company had sold out its capacity for 2026 and had sold most of its 2027 capacity, with a large portion of 2028 capacity reserved. The company also keeps some capacity for on-demand services and inference, leaving part of its capacity outside advance bookings. These reservations signal demand for infrastructure, but do not in themselves represent realized revenue or demonstrate a level of profitability. Amazon said earlier this year that it planned to spend about $220 billion on capital expenditures in 2026, and Jassy said he sees room to spend more in response to cloud demand.

The expansion is not limited to Amazon; estimates cited by Investing.com suggest capital spending by hyperscale cloud computing operators could reach about $800 billion during 2026. That spending affects the chip, data center, networking and energy sectors, but also makes financing costs and cash flow more important to investors. In Monday’s session, Nvidia shares jumped 2.4%, recovering some of their losses after three consecutive weeks of declines, their longest such streak since June, according to the Associated Press. CoreWeave shares also swung during the session, falling 5.5% after trading began, then rising 6.6% before ending the session up 1.8%; the agency linked the volatility to concerns about debt used to finance AI computing capacity. Meta announced plans to raise $35 billion through a stock sale to help fund its AI investments, and said Nvidia, AMD and Broadcom had indicated they might buy shares worth a combined $5 billion in the offering.

EL7 closing prices show mixed performance among companies due to report results during the period from October 20 to 26. Amazon shares fell from $262.63 on October 20 to $249.09 on October 26, while Alphabet shares dropped from $340.28 to $316.8. Microsoft shares, by contrast, rose from $531.87 to $532.6 over the same period. These moves provide market context ahead of the earnings releases, but do not determine in advance what the companies will reveal about business growth or spending. Balancing demand indicators against the cost of expansion and its financial returns remains among the issues the market is watching most closely during earnings season.

The Federal Reserve meets on October 27 and 28, with its chair scheduled to hold a news conference on October 28 at 2:30 p.m. Eastern time, according to the official calendar. The Associated Press said the prevailing expectation is that the central bank will end its meeting on Wednesday without changing the federal funds rate. The meeting comes in a week when markets are tracking technology companies’ capital spending and its financing costs, making the interest rate outlook part of the context for assessing expansion plans. After the meeting, the U.S. Bureau of Economic Analysis is scheduled to release its September personal income and outlays report on October 29 at 8:30 a.m. Eastern time. The Personal Consumption Expenditures price index is released monthly as part of the report, according to the bureau, making October 29 the next release date for the index.