Two days ago, semiconductor stocks were being treated as the weak link in the AI trade. By Tuesday’s close, traders were chasing them again.
The Philadelphia Semiconductor Index jumped 5.2%, while Micron surged 12.2%. That move arrived before Alphabet, Texas Instruments or Intel had delivered the week’s main evidence on cloud demand, capital spending and the health of the broader chip cycle.
That does not automatically make the rally irrational. It makes the rally conditional.
The spending problem Alphabet must answer
Alphabet enters earnings with 2026 capital-expenditure guidance of $180 billion to $190 billion.
The market will be watching whether Google Cloud is growing quickly enough to justify that bill, and whether free cash flow remains credible after another year of aggressive data-centre investment.
This is becoming the central question across Big Tech. Demand is no longer the only issue. Investors increasingly need to see a clear link between the money going into AI infrastructure and the cash eventually coming back out.
Alphabet's Earnings Will Reveal All
Alphabet is sitting near the 337.47-349 support zone before earnings. That keeps the immediate recovery case alive, but the first meaningful test is...
