Q2 Tech Earnings Preview: Chips, Memory, Software

Although the tech sector has struggled so far this summer, earnings have been strong. As of July 24, with 27% of S&P 500^Ò Index companies having reported earnings, the information technology sector reported 64.6% earnings growth, according to FactSet. In aggregate, tech stocks have posted earnings 15.6% above Wall Street's estimates.

Despite the impressive results, post-earnings performance has been mixed at best. Intel (INTC) is a prime example. The company's stock struggled even after it topped analysts' second-quarter earnings per share (EPS) and revenue estimates, clocking its fastest revenue growth in 15 years.

Even management confidence in the AI boom hasn't been enough to help tech stocks. Intel CEO Lip-Bu Tan told analysts that "AI is driving unprecedented demand for compute" in the company earnings call, while CFO David Zinsner noted that "customers continue to signal a strong and sustainable spending environment." Investors have abandoned the stock anyway, with shares now down more than 20% since its earnings release.

Investors also punished Alphabet (GOOGL) after the company reported negative cash flow and guided for $200 billion in capital expenditures this year in its second-quarter earnings report. In past quarters, the company's impressive 82% cloud revenue growth may have been enough to buoy shares, but investor patience around aggressive AI spending now seems to be wearing thin.

South Korean memory giant SK Hynix (SKHY) also reported a record quarterly profit of roughly $42 billion and a 257% revenue surge only to see its shares plunge in after-hours trading because even those impressive results didn't match analysts' lofty expectations. While all signs point to resilient demand for chips and memory amid record hyperscaler spending, investor sentiment has cratered for stocks tied to the AI boom.

The mixed reactions to strong tech earnings suggest investors are demanding more than strong quarterly results. With tech valuations still elevated, companies increasingly need to pair earnings beats with strong guidance and clear evidence of AI monetization. This dynamic could continue as semiconductor and memory companies report earnings over the coming weeks.

Semiconductor earnings this quarter should offer one of the clearest reads yet on whether AI infrastructure demand remains strong. While hyperscalers have pledged to continue their spending spree this quarter, investors will look for evidence that AI spending is broadening—and that it is translating into sustainable growth across the broader chip ecosystem.

Beyond headline results, investors should pay close attention to management commentary on customer demand and order trends in AI infrastructure stocks' earnings. For chipmakers such as Nvidia and Advanced Micro Devices, customer adoption of next-generation chips, data center demand, pricing, and customer concentration trends will be critical. With expectations high, these firms will also need to prove that their rapid AI-driven revenue growth can continue without impacting margins.

Investors may also be listening for commentary and details around so-called circular AI deals. These arrangements—where tech giants invest in AI startups or data centers, which then use those funds to buy the investors' chips and cloud services—are being heavily scrutinized. While Wall Street seems largely unfazed by the concerns about circular deals, the practice can potentially inflate demand artificially.

Investors will look for evidence that AI infrastructure spending is being driven by expanding enterprise and consumer adoption of AI, rather than transactions within a relatively small group of tech firms.

"My understanding is that these types of financing arrangements are common when there is a major infrastructure buildout or technology disruption," said Nathan Peterson, director of derivatives research and strategy at the Schwab Center for Financial Research. "It's not necessarily a problem, but it's financing that can contain conflicts of interest and concentration risk."

Finally, forward guidance will likely be just as important as quarterly results for semiconductor and related hardware companies. Investors will be looking for clues about whether chipmakers expect AI-related demand to remain strong through the second half of the year and into 2027, or if spending is beginning to normalize after the industry's rapid infrastructure buildout.

Memory makers have been among the biggest beneficiaries of the AI boom, but investors are increasingly questioning how long the industry's favorable supply-and-demand dynamics can last. While there's evidence that demand for high-bandwidth memory (HBM) and Dynamic Random-Access Memory (DRAM) remains robust for now, concerns about new competition and the industry's long history of boom-bust cycles have pressured shares in recent weeks.

"I think it's logical to assume that supply will catch up at some point in the cycle and there will be an inflection point in supply/demand imbalances," Peterson said. "But perhaps because AI is the largest tech infrastructure buildout in history, requiring unprecedented amounts of memory, this cycle will be longer than previous ones."

One of the biggest issues facing memory makers is increasing competition. Shares of Chinese memory maker ChangXin Memory Technologies (CXMT) skyrocketed more than 450% on their Shanghai trading debut in late July, making the company the largest publicly listed firm by market cap on a mainland China exchange. CXMT is the fourth-largest producer of DRAM worldwide, holding roughly 8% of the global market. This makes it a direct competitor with U.S.-listed companies such as Micron and SK Hynix.

"Companies like CXMT going public suggest that more supply of DRAM may be coming online sooner than anticipated because going public provides more access to capital, which can be used to invest in supply expansion," said Peterson.

Ultimately, investors will look for evidence that AI-driven demand can continue outpacing new memory supply. If it can't, memory makers may face yet another boom-and-bust cycle.

Enterprise software stocks have rebounded sharply from their April lows as fears of AI disrupting their business models have eased. Still, investors will likely expect earnings to justify that recovery, with a particular focus on whether software companies' own AI products are translating into stronger revenue growth, customer adoption, and forward guidance.

"Software companies leveraging AI will need to show AI monetization," said Peterson. "Generally, if forward guidance—in the form of revenue, earnings, or margins—for these software companies is coming in below analyst estimates, investors will put them back in the penalty box."

Investors should pay attention to annual recurring revenue and remaining performance obligations—a metric that tracks future revenue software companies have locked in from customers. Companies like ServiceNow (NOW), Salesforce, and Adobe have tied their AI strategies to software subscription growth and AI-powered products, making those metrics an important gauge of whether AI investments are beginning to generate meaningful returns.

Investors may want to track any updates on shifts in software pricing models as well. Some firms are transitioning toward consumption-based pricing as new AI tools increase costs, making fixed-fee software subscription pricing risky. Management commentary on the rollout, adoption, and revenue impact of these consumption-based pricing models will be closely watched on Wall Street.

Early earnings in the software industry have been mixed, even as sentiment has continued to improve.

International Business Machines (IBM) missed EPS and revenue estimates while lowering its full-year revenue guidance in its second-quarter earnings report. Management attributed the shortfall to enterprise clients redirecting spending from certain software contracts toward servers, storage, and memory infrastructure products.

However, recent results from ServiceNow were constructive for the software industry. The company topped EPS and revenue estimates in its second-quarter earnings report, while raising its full-year subscription revenue outlook. Total revenues surged 24% year over year, while subscription revenue grew 24.5%, and remaining performance obligations jumped 21%. Investors want to see similar results from Salesforce, Adobe, and other software giants in the weeks ahead.

As the sector recovers, investors will also be looking for signs that AI is beginning to separate long-term winners from companies still struggling to monetize the technology.

"Software is still being sorted out and price discovery of a 'fair multiple' is still underway, so expect the process of sorting out the winners from losers to continue," said Peterson.

There's a packed calendar of earnings from a slew of semiconductor companies, software firms, cybersecurity leaders, e-commerce giants, memory makers, and more in the coming weeks. Here's what's on the menu.

Tracking tech companies' ability to top Wall Street's expectations will be critical in the second half of this earnings season, with investors questioning AI spending and ROI. Here's a breakdown of the consensus earnings and revenue estimates analysts* expect for some major tech stocks set to report:

• Palantir Technologies (PLTR): Reporting August 3, analysts expect EPS of $0.35 (up 116.9% year over year) and revenue of $1.8 billion (up 79.7% year over year)
• Advanced Micro Devices (AMD): Reporting August 4, analysts expect EPS of $1.61 (up 235.8% year over year) and revenue of $11.3 billion (up 46.7% year over year)
• Arista Networks (ANET): Reporting August 4, analysts expect EPS of $0.89 (up 21.2% year over year) and revenue of $2.8 billion (up 27.8% year over year)
• Cisco Systems (CSCO): Reporting August 12, analysts expect EPS of $1.17 (up 18.2% year over year) and revenue of $16.8 billion (up 14.7% year over year)
• Applied Materials (AMAT): Reporting August 13, analysts expect EPS of $3.39 (up 36.9% year over year) and revenue of $9 billion (up 23.1% year over year)
• Nvidia (NVDA): Reporting August 26, analysts expect EPS of $2.09 (up 98.6% year over year) and revenue of $91.8 billion (up 96.3% year over year)
• Dell Technologies (DELL): Reporting August 27, analysts expect EPS of $4.89 (up 110.6% year over year) and revenue of $44.8 billion (up 50.5% year over year)
• Salesforce (CRM): Reporting September 2, analysts expect EPS of $3.27 (up 12.5% year over year) and revenue of $11.3 billion (up 10.6% year over year)
• Broadcom (AVGO): Reporting September 3, analysts expect EPS of $3.24 (up 91.5% year over year) and revenue of $29.4 billion (up 84% year over year)
• Oracle (ORCL): Reporting September 8, analysts expect EPS of $1.74 (up 18.4% year over year) and revenue of $19.1 billion (up 28.2% year over year)
• Micron Technology (MU): Reporting September 24, analysts expect EPS of $31.31 (up 933.2% year over year) and revenue of $50.6 billion (up 347.4% year over year)

*Note: Average analyst earnings and revenue estimates are as of July 27, 2026, courtesy of Schwab.com, and are subject to change.

Ultimately, this earnings season may help determine whether the recent chip and AI-infrastructure sell-off reflects deteriorating fundamentals, or if it is simply investors resetting their lofty expectations. With key earnings still ahead, investors may be reluctant to write off the AI trade just yet.

Hyperscaler AI spending remains robust, and if tech management teams provide strong guidance that signals demand for chips, memory, and other AI infrastructure will continue, the recent weakness in chip and related AI-infrastructure stocks could prove overdone.

"Given the AI infrastructure cohort has been de-risked so significantly since mid-June, the potential to get a rotation back into this space could catch some traders off guard," said Peterson.