Earnings Scoreboard - AI CapEx meets the Cost of Capital

AI CapEx under the cost-of-capital lens, energy's windfall and the physical economy — themes that define this week

The capex clearing price: four hyperscalers and one rate decision. Alphabet answered the first half of the AI CapEx dilemma last week and posed the second. Google Cloud grew 81.8% y/o/y, the Cloud backlog reached $514 billion and consolidated Operating margin expanded two percentage points to 34.0%. The level of demand is not in doubt. However, management simultaneously raised full-year CapEx guidance to a range of $195 billion to $205 billion, from $180 billion to $190 billion, as Q2 FCF swung to an outflow of $5.855 billion, and the shares fell after hours. The market has moved past asking whether the buildout is generating revenue and has defined a limit: FCF related to the core business funding AI ambitions. That is the tension facing Microsoft, Meta and Amazon this week, even if the $754 billion figure the Street had been carrying for 2026 hyperscaler CapEx now looks like a floor rather than a ceiling.

The setting could hardly be less forgiving. Microsoft and Meta report roughly two hours after the FOMC statement on Wednesday, with Apple and Amazon following the next evening. The base case remains a hold at 3.50% to 3.75%, but the probability of a hike implied by CME FedWatch has risen to 33.7%, from 25.7% on 21 July. The mechanism that matters for this week is arithmetical: a rising discount rate compresses the present value of cash flows that arrive late. The AI buildout is, by construction, a set of cash flows that arrive late. Hyperscaler CapEx and the cost of capital are being repriced in the same twenty-six hours. This suggests the hyperscaler CapEx cycle remains investor-friendly when growth and margin expansion are protected as capital is being deployed.

The picks and shovels are outperforming the platforms. Lam Research and the wafer-fab equipment (WFE) supercycle test whether semiconductor capital spending is a leading or lagging indicator of AI capex durability. Because chipmaking equipment orders typically precede the compute capacity that shows up in hyperscaler data centres, Lam's guided-for record EPS of $1.65 and revenue of $6.6 billion, alongside an upwardly revised 2026 WFE estimate of $140 billion-plus, effectively front-run the CapEx commentary due from Meta, Microsoft, and Amazon later in the week.

If Lam's results and forward commentary holds up even as hyperscaler CapEx guidance shows signs of moderating, it would suggest the equipment order book already reflects a more durable, multi-year memory and logic buildout cycle that is somewhat insulated from quarter-to-quarter sentiment about any single hyperscaler's spending pace. Investors should also assess Seagate’s fully sold-out nearline capacity through 2027 alongside Lam’s results. Both companies point to the same supply-chain conclusion from different positions: physical capacity, rather than demand uncertainty, remains the primary constraint across storage and semiconductor equipment. That message stands in clear contrast to the narrative implied by Alphabet’s stock reaction last week.

This week extends the test across the physical layers: Corning in optical connectivity, Seagate in mass-capacity storage, Lam Research in wafer fabrication equipment, Vertiv in power and thermal management and Equinix in colocation capacity. If those five confirm accelerating demand while the hyperscalers guide CapEx higher, the read-through is that the layers underneath, not the platforms, is where the buildout's economics currently reside.

Finally, Chevron and Valero feed the geopolitical energy narrative and, through it, the monetary one. The recognition that supply risk in the Gulf and the Red Sea is now a persistent rather than episodic input to the inflation outlook has become the central constraint on the FOMC. These two prints quantify what that risk is worth in earnings.

This week’s preview: The WEF supercycle ahead of AI CapEx durability, AI's different layers at play, energy's windfall and defence momentum

Major Earnings on the Docket

▪  Corning opens the week on Tuesday before the market opens, and functions as our Alpha Vibes’ Networking layer read. Consensus calls for EPS of $0.76, up 25.9% y/o/y, on revenue of $4.629 billion, reflecting a y/o/y growth rate of 14.4%. The earnings call is scheduled for Tuesday at 8:30 am EDT.

The key driver remains Optical Communications, where the Street has pencilled in revenue of $2.064 billion, representing 31.8% y/o/y growth after a 36.2% expansion in Q1. That momentum was subsequently reinforced by two new long-term hyperscaler agreements, with Nvidia on 6 May and Amazon on 8 June. Corning has also extended its Springboard growth plan through 2030. Optical Communications has been the company’s standout segment in 2026, supported by hyperscaler demand for fibre and connectivity products that enable AI data centres to operate at higher density and at a lower cost per bit than competing solutions.

Two offsets warrant close attention. First, Corning’s Q2 guidance incorporated an extended maintenance shutdown at its solar wafer facility to transition to a permanent power system, repair and modify equipment and increase future throughput. The shutdown is expected to add $30 million in expenses to the Solar segment, which grew 79.6% y/o/y in Q1. Second, tariff exposure remains a live cost line.

Corning remains one of the less widely discussed beneficiaries of AI infrastructure, but also one of the most direct. This is because generative-AI cluster architectures consume fibre and connectivity in proportion to the number of accelerators being interconnected, rather than in proportion to physical floor space. At JP Morgan’s Global Technology, Media and Communications Conference on 19 May, Corning’s corporate presentation, featuring COO Avery Nelson III and CFO Ed Schlesinger, projected that Enterprise Business, housed primarily within the Optical Communications segment, is expected to grow at 1.3x to 1.5x GPU growth rate through at least 2028. The company also indicated that Return on Invested Capital (RoIC) is targeted to reach the high teens, with potential to exceed twenty percent, while Operating margin is expected to remain at or above twenty percent even as Corning continues investing for growth. Confirmation that Optical Communications is compounding above the Street’s estimate of 31.8% would corroborate the hyperscaler CapEx guides investors will receive forty-eight hours later.

▪  Boeing also reports Tuesday, at 7:30 am EDT. Consensus estimates a per-share loss narrowing to $0.28 from a $1.24 loss a year earlier, on revenue of $23.264 billion, up 6.7 y/o/y. The earnings call is scheduled at 10:30 am EDT. The company delivered 171 commercial aircraft in Q2, contributing to its highest first-half delivery total since 2018, including 129 737s, and 35 defence aircraft and systems, alongside FAA restoration of airworthiness self-certification authority and a $695 billion backlog highlighted at the Farnborough Airshow. Boeing is currently ramping up its 737 MAX production rate from 42 to 47 jets per month, following a successful FAA capstone review, while 787 output remains at 8 per month, constrained by supply-chain bottlenecks rather than demand.

Four factors will shape the reaction. First is the FCF inflection, which has been the central pillar of the equity story for the past two years. It is framed bymanagement’s full-year guidance for $1 to $3 billion in positive FCF. For Q2, consensus anticipates an FCF outflow of $177 million, implying a sequentialimprovement from Q1’s $1.454 billion outflow, which came in ahead of consensus expectations for a $2.338 billion outflow. Second, Boeing Commercial Airplanes Operating margins trajectory, as investors anticipate genuine sequential progress toward the company’s mid-2027 positive-margin target. Following Q1’s $563 million operating loss, the Street expects the segment to report a $286 million operating loss, equivalent to a negative margin of 2.5%, while revenue is projected to increase 7.1% y/o/y to $11.648 billion. Third, the reintegration of Spirit AeroSystems (acquired in December 2025) and its potential effect on stabilising the fuselage supply chain. Fourth, certification timelines for the 777-9 and the 737-7 and -10, each of which carries deferred revenue and customer-compensation implications.

Boeing's print offers a direct read on whether the commercial-aerospace demand cycle that lifted GE Aerospace and RTX’s Collins and Pratt segment last weekextends to the manufacturer itself, not just the aftermarket-services.

▪ Seagate closes Tuesday after the market at 4:05 pm EDT, with the earnings call scheduled for 5:00 pm EDT. Consensus anticipates EPS of $5.10, representing growth of 96.9% y/o/y, on revenue of $3.497 billion, up 61.9% y/o/y. These expectations sit against management guidance of revenue at $3.450 billion, plus or minus $100 million, and EPS of $5.00, plus or minus $0.20.

The prior quarter set a high bar. Revenue reached $3.112 billion, EPS rose to $4.10, gross margin reached a record 47.0% and FCF increased 4.4x y/o/y to $953 million. The HAMR and Mozaic ramp is the whole story, with Mozaic 4 moving toward 44 terabytes per drive and qualified with the five largest cloud customers, exabyte capacity pre-sold through the middle of the 2026 calendar year. Management has also raised its multi-year revenue growth target to at least 20%. For Q2, the Street has pencilled in an Operating margin of 50.0%, implying a 300 bps sequential improvement from Q1 and a 1,380 bps expansion from the 36.2% reported in Q2 2025. FCF is expected to rise 146.7% y/o/y to $1.048 billion.

At the Bank of America Global Technology Conference held on 2 June in San Francisco, Seagate’s corporate presentation reinforced a disciplined operatingframework. Management indicated that pricing will continue to be managed through measured increases rather than aggressive actions. The objective is to sustain customer relationships while protecting value per terabyte. Factory utilisation is already maxed out, so future exabyte growth is expected to come primarily from higher-capacity drives rather than from a material increase in unit volumes. The roadmap also remains anchored in continued capacity gains. Qualification of the 50TB drive is targeted before the end of 2027, supporting further exabyte growth as higher-density products scale. As this mix shift progresses, gross margin expansion is expected to be supported by the ramp of higher-capacity drives and by a still-favourable pricing environment. Capital allocation remains shareholder-oriented, with increased dividends and additional share buybacks expected as leverage is reduced.

The principal risk is that visible build-to-order demand leaves little room for disappointment. Pricing per terabyte and margins must remain resilient as capacity scales. Seagate offers one of the clearest reads on AI memory and storage layer’s demand.

▪  Vertiv reports Wednesday before the open at 5:55 am EDT and the earnings call scheduled at 11 am EDT. Vertiv offers the Site-readiness and Physical Infrastructure layer’s data-centre power-and-thermal-management read that parallels GE Vernova's role last week.

Management guided Q2 EPS to $1.37 to $1.43 on sales of $3.250 billion to $3.450 billion, implying organic growth of 20.0% to 24.0%. At its Q1 print, the company raised full-year 2026 guidance to $13.5 to $14 billion in sales and EPS of $6.30 to $6.40, citing strong data-centre demand and market-share gains. For Q2, consensus expects revenue of $3.379 billion, up 28.1% y/o/y, organic growth of 23.3% and EPS of $1.42, implying EPS growth of 49.7% y/o/y.

There are two drivers: orders and book-to-bill and Operating margin. Vertiv’s revenue lags data-centre construction starts, making its order book a leading indicator for the broader power and thermal-management chain. On margin, the company is expected to show that it can scale liquid-cooling deployments without sacrificing price, especially after Eaton’s acquisition of Boyd’s thermal business introduced a credible competitor. The Street expects a Q2 operating margin of 21.2%, up 39 bps sequentially from Q1’s 20.8% and 264 bps y/o/y. At a forward P/E of 35.3x, the valuation leaves little room for disappointment. Vertiv’s print will appraise investor appetite for backlog growth ahead of near-term margin delivery across the AI-infrastructure ecosystem.

▪  General Dynamics opens this week’s defence read after strong beats and raised guidance from Lockheed Martin and RTX last week. The company reports Wednesday before the open at 7:00 am EDT, with the earnings call scheduled for 9:00 am EDT. The Street has penciled in EPS of $3.96, up 6.0% y/o/y, on revenue of $13.522 billion, up 3.7% y/o/y.

General Dynamics brings a different mix from the primes that reported last week, with exposure to Gulfstream business jets, Marine Systems and Combat Systems. However, the same theme applies, namely the pace of backlog conversion under the broader rearmament thesis. Furthermore, in the case of General Dynamics, the degree of submarine and shipbuilding execution risk is highly relevant.

At the segment level, the Street expects Marine Systems revenue of $4.339 billion, up 2.8% y/o/y; Combat Systems revenue of $2.348 billion, up 2.8% y/o/y; Technologies revenue of $3.485 billion, up 0.3% y/o/y; and Aerospace revenue of $3.337 billion, up 9.0% y/o/y after a record 38 G700 and G800 deliveries in Q1. Total backlog stands at $130.840 billion, with total estimated contract value of $188.400 billion.

The key variables are throughput and margin. In Marine Systems, skilled labour and supplier capacity remain the binding constraints on Columbia and Virginia-class submarine production, making the segment margin trajectory the clearest indicator of easing pressure. Although Marine Systems revenue rose 21.0% y/o/y in Q1 to $4.343 billion, operating margin improved by only 31 bps to 7.0%. For Q2, consensus anticipates a 28 bps y/o/y expansion to 7.2%, while management has guided full-year segment operating margin to 7.35% to 7.50%. In Aerospace, the question is the durability of the G700 and G800 delivery cadence at management’s guided margins, given business-jet demand’s sensitivity to corporate confidence and the rate environment. Management has guided full-year Aerospace operating margin to 14.0%, in line with the Street’s Q2 expectation. Read alongside Lockheed’s record backlog and RTX’s raised guidance, General Dynamics will reflect how far last week’s defence sector optimism extends acrossthe primes’ broader platform base, beyond aircraft engines and munitions.

▪  Meta Platforms reports Q2 earnings on Wednesday after the close and the earnings call is scheduled at 4:30 pm EDT. The company guided Q2 revenue to $58 to $61 billion. Consensus estimates reach $60.224 billion, implying 26.7% y/o/y growth and advertising revenue of $58.937 billion. The Street has pencilled in EPS of $7.19, a marginal increase of 0.7% y/o/y.

Four considerations frame the print. First, acceleration in Family of Apps’ Advertising revenue growth. Because the segment, which includes advertising across Facebook, Instagram and WhatsApp, is Meta’s profit engine, investors will focus on the balance between ad impressions growth and price-per-ad growth. The mix has recently shifted toward volume, as AI-powered targeting and creative tools lift advertiser demand despite a softer pricing backdrop. The average price per ad growth rate, is expected to accelerate to 14.4% y/o/y, following a disappointing 12.0% y/o/y growth rate in Q1 that fell short of 16.7% estimates. On the other hand, Ad Impressions delivered growth rate is projected to be 13.2%, following 19.0% in Q1 and 11.0% a year earlier.

Second, and most acutely after Alphabet, CapEx trajectory. Can Meta pair elevated CapEx with credible monetisation rather than promise? In its Q1 print, the company raised its full-year CapEx guidance to a range of $125 to $145 billion, from $115 to $135 billion. Furthermore, like Alphabet, Meta’s Q2 FCF is expected turn negative. Estimates anticipate a Q2 outflow of FCF of $801 million, down from $12.386 billion in Q1. Additionally, the Financial Times reported on 5 June that Meta is considering raising tens of billions of dollars in a stock offering as it seeks new sources of capital to fund its vast ambitions in AI.

Third, the reported discussions around renting compute capacity to third parties as reported by CNBC in May and Bloomberg in June. Talks with Anthropic said to be worth approximately $10 billion over two years, as reported by the New York Times, would represent a strategic pivot from consuming infrastructure to selling it. Fourth, the performance of Reality Labs will be monitored as the VR/AR division continues to post losses. As margins come under pressure, any widening of that loss run-rate will draw scrutiny.

The question for Meta's Q2 speaks to one of the most durable economic phenomena of the digital age as it enters the most capital-intensive period in its history. Can the most successful advertising flywheel fund a compute arms race without diluting the earnings profile that justifies its multiple?

▪  Microsoft reports on Wednesday after the close, with the earnings call scheduled at 5:30 pm EDT. Consensus sits at EPS of $4.24, up 28.2% y/o/y, on revenue of $87.620 billion, up 14.6% y/o/y, with the Intelligent Cloud segment, home to Azure, expected to be the primary growth driver. Microsoft enters this print with guidance for Intelligent Cloud segment of $37.950 to $38.250 billion in revenue. The Street has pencilled in implied y/o/y growth of 27.7%, a decrease from the 29.6% seen in Q1.

Five metrics will be under scrutiny. First, the Azure growth rate, the single most watched data point in the company’s earnings. Azure itself is guided bymanagement to grow 39% to 40% in constant currency, a slight acceleration from the 39.0% pace of the prior quarter. In its Q1 print, CEO Satya Nadella stated that Microsoft's AI business achieved a $37 billion annualised revenue run rate, marking a 123% y/o/y increase driven by Azure cloud infrastructure partnerships and Copilot software adoption. For investors, this milestone implies that Microsoft is monetising its AI-focussed CapEx, proving that enterprise AI can evolve into an active revenue engine. Analysts’ consensus now models Azure Q2 revenue at$30.276 billion, up 39.0% from $21.789 billion a year ago.

Microsoft 365 Copilot adoption metrics will be the secondary signal. The AI assistant product has been the centrepiece of Microsoft's enterprise AI monetisation story and any acceleration in paid seat adoption, particularly in the commercial mid-market, would provide evidence that the Copilot cycle is beginning to compound. Microsoft 365 Copilot paid seats have surpassed 20 million and are growing sequentially, a metric increasingly viewed as the clearest read on whether enterprise AI adoption is translating into durable per-seat revenue.

Third, full-year 2026 CapEx is guided to be $190 billion and $40 billion in Q2, including $5 billion from higher component pricing and finance leases. For Q2, however, consensus anticipates $36.132 billion, implying a y/o/y growth rate of 111.6% and a sequential 17.0% q/o/q growth rate. FCF is expected to keep contracting, falling 34.2% y/o/y to $16.830 billion after a 22.2% decline in Q1 to $15.803 billion. Unlike Alphabet, Microsoft is still expected to generate positive FCF in Q2. Any increase in CapEx guidance would draw closer scrutiny of potential FCF deterioration and margin pressure.

Fourth, the More Personal Computing (MPC) segment, spanning Windows OEM licensing, Surface devices and Xbox, faces a difficult y/o/y comparison and is guided toward $11.750 to $12.250 billion, implying a high single to low-teen digit revenue decline. This makes it the one soft spot in an otherwise robust setup. For Q2, consensus expects MPC revenue to decline 9.6% y/o/y to $12.155 billion, driven by a 12.6% decline in Gaming.

Fifth, Gross margin, which fell to 67.6% in Q1, its lowest level since 2022, as data- centre depreciation weighed on results. The figure is viewed as a signal of how the buildout is balancing pricing power against balance-sheet absorption. For Q2, Gross margin is expected to decline to 66.6%, down 104 bps from Q1 and 199 bps from a year earlier.

Margin commentary around component costs and AI infrastructure depreciation will be closely parsed alongside Meta's CapEx disclosure that same afternoon and Amazon's the following evening.

▪ Robinhood reports Q2 on Wednesday at 4:05 pm EDT, with the earnings call scheduled at 5:00 pm EDT, offering a read on retail trading activity and the status of the crypto-market. Consensus anticipates EPS of $0.43, up 2.3% y/o/y, on revenue of $1.287 billion, reflecting a growth rate of 30.1% y/o/y and 20.6% q/o/q. The prior quarter, EPS of 38 cents missed the 39 cents estimate.

Robinhood’s corporate presentation at the Piper Sandler Global Exchange and Trading Conference on 5 June pointed to a broad acceleration in platform activity.April 2026 was the company’s second-highest month on record for equity and options trading, while futures and prediction-market volumes reached all-time highs in May. On 1 June, Robinhood also recorded its largest ever day for equity trading. The company has launched AI-agent trading and plans to expand the capability across additional asset classes. Prediction markets have reached a $400 million run-rate business, with further growth expected. On 9 June CEO Vlad Tenev announced via X that Robinhood had received approval to operate as an underwriter.

A few drivers will shape the Q2 read-through. The first is trading activity and revenue mix across equities, options and crypto, where the composition of volumes determines revenue quality. The second is the contribution from prediction markets and event contracts, which remain the newest and least modelled revenue stream. The sharp decline in crypto trading volumes has already been flagged as a headwind. At the segment level, the Street expects Options revenue to rise 27.6% y/o/y to $338 million, Equities revenue to grow 89.6% y/o/y to $125 million and Cryptocurrencies revenue to decline 45.2% y/o/y to $87.6 million.

Robinhood’s Q2 print therefore offers a useful read on retail-investor risk appetite, particularly in the more speculative areas of crypto trading and event-driven markets.

▪  Equinix reports Wednesday after the close, with the call scheduled for 5:30 pm EDT, offering the data-centre real-estate read-through on the same AI site-readiness and physical-infrastructure layer highlighted by Vertiv. Consensus anticipates adjusted funds from operations per share of $11.35, up 14.5% y/o/y, on gross rental revenue of $2.590 billion, up 14.8% y/o/y. EBITDA is projected to reach $1.362 billion, up 20.6% y/o/y, while net operating income is expected to grow 7.7% y/o/y to $1.668 billion. For Q2, management guided revenue to $2.571 billion to $2.611 billion and EBITDA to $1.349 billion to $1.389 billion. At its Q1 print, the company also guided monthly recurring revenue (MMR) growth of 10.0% to 11.0% y/o/y for Q2.

Full-year guidance calls for revenue of $10.140 billion to $10.240 billion, an adjusted EBITDA margin of 51.0%, up 200 bps from 2025, AFFO per share of $42.31 to $43.11 and CapEx, excluding xScale and land, of $4.100 billion. AI-related demand is becoming increasingly visible across the platform. Roughly 60% of the company’s largest Q1 deals were tied to AI use cases, large-capacity fabric connections have tripled y/o/y and Q1 delivered record annualised gross bookings of $378 million, up 9% y/o/y.

There are three drivers for consideration. The first is the bookings trajectory and its implication for stabilised yields across the expansion pipeline. Second, the xScale hyperscaler joint venture, which allows Equinix to participate in the largest deployments while limiting consolidated capital intensity. The third is power availability, now one of the sector’s clearest scarcity points.

The main caution is that Q1 AFFO of $10.79 missed the $11.00 consensus and Equinix remains particularly exposed to a hawkish FOMC outcome as a REIT with a lengthening capital programme.

▪  Lam Research reports Q2 results on Wednesday at 4:05 pm EDT, with the call scheduled for 5:00 pm EDT. The print offers the clearest read this week on the wafer-fab-equipment (WFE) cycle within AI’s Fabrication Equipment and Process- Materials layer. The Street has pencilled in EPS of $1.69, up 26.8% y/o/y and ahead of management guidance of $1.65, plus or minus 15 cents, on revenue of $6.665 billion, up 28.9% y/o/y and slightly above midpoint guidance of $6.600 billion. Management has guided Q2 gross margin to 50.6%, compared with the Street’s 50.4% estimate.

The pivotal disclosure will be the WFE outlook, which management recently raised from $135 billion to more than $140 billion for 2026, with an upward bias supported by AI-related memory and logic capacity additions. Lam’s greater than 30% share in etch and deposition gives the company disproportionate exposure to high-bandwidth memory and advanced packaging, two areas where accelerator supply remains constrained. The company is also benefiting from the NAND and DRAM upgrade cycle that has been building for the past eighteen months.

At Bank of America’s Global Technology Conference on 2 June, CEO Tim Archer and CFO Doug Bettinger emphasised robust customer engagement and strongdemand visibility into 2027 and beyond. They also highlighted Lam’s expanding addressable share in etch and deposition, which has moved from the low- to mid- thirties range and is targeted to reach the high-thirties range over the next several years. Management expects Lam to outgrow the broader WFE market in 2026 and in the following years, supported by share gains in advanced foundry and logic, which now represent more than half of recent systems revenue. Capital allocation remains shareholder-oriented, with more than 85% of FCF expected to be returned through dividends and buybacks, alongside continued annual dividend growth in 2026.

Lam's results function as the connective link between this week's Corning-and- Seagate physical-infrastructure signals.

▪  Valero Energy reports Thursday before the open, with the call scheduled for 10:00 am EDT. Consensus anticipates EPS of $10.13, up 344.2% y/o/y from $2.28. The prior quarter delivered EPS of $4.22 on a refining margin of $14.90 per barrel and throughput of 2.914 million barrels per day, up 3.1% y/o/y, alongside renewable diesel operating income of $139 million and ethanol operating income of $90 million. On its Q1 call, management reiterated its focus on shorter-cycle optimisation and efficiency projects intended to enhance asset earnings capacity.

The Q2 setup is exceptional. Crack spreads have widened materially, with diesel near $91 and gasoline near $59, while global refining utilisation is running close to 96.2%. The Iran conflict has also lifted product prices and redirected export demand toward US Gulf Coast capacity, strengthening the near-term earnings backdrop. Management has guided Q2 refining throughput to 92% to 95% of the company’s roughly 3.0 million bpd combined capacity, above Q1 levels, which were affected by the temporary idling of the Benicia refinery and lower rates during the Port Arthur repair process.

Capital returns remain an important part of the equity story. On 25 February, the board authorised up to $2.5 billion of common-share repurchases with no expiration date, of which $1.4 billion remained available as of 30 June. On 16 July, the board approved an additional $5 billion repurchase authorisation, also with no expiration date, adding to the remaining capacity under the February 2026 programme.

The Refining segment, the dominant profit driver, delivered Operating income of $1.818 billion in the prior quarter, reflecting a growth rate of 200.5% y/o/y. Management signalled that elevated refining margins could persist for six months to a year even after the Strait of Hormuz reopens, given the time required to rebuild depleted refined-product inventories globally. For Q2, the Street anticipates Refining Operating income to reach $3.831 billion, up 201.6% y/o/y and 110.7% q/o/q on Production per Day of 2.830 bpd.

Valero is the most geared listed expression of the refining complex and therefore the clearest read on how much of the oil shock is accruing to processors rather than producers.

▪  Amazon reports Thursday after the close, at 4:00 pm EDT, with the call scheduled at 5:00 pm EDT. Consensus anticipates EPS of $1.82, up 8.2% y/o/y on revenue of $196.831 billion, up 17.4% y/o/y. The Street anticipates Operating income to reach $23.523 billion, up 22.7% y/o/y, and reflecting a 12.0% Operating margin. For Q2, management has guided a net sales range of $194 to $199 billion and operating income range of $20 to $24 billion, the latter including $1 billion of incremental Leo satellite costs.

AWS remains the segment investors will scrutinise most closely. Consensus places AWS revenue at $40.644 billion at an operating margin of 33.5%, following a Q1 in which AWS revenue of $37.587 billion, up 28.4% y/o/y, its fastest pace in fifteen quarters, and contributed 59.4% of total Operating income. The Street has raised cloud Operating income forecasts more aggressively than its revenue estimates. AWS Q2 revenue estimates have risen from $38.586 billion at the beginning of Q2 to $40.464 billion today, a 5.3% increase. AWS Operating income has risen from $12.651 billion to $13.624 billion during the same period, a 7.7% increase. However, the Street still anticipates a sequential Operating margin contraction of 415 bps from Q1’s 37.7% and a 61 bps contraction from a year earlier.

Advertising revenue is another key driver, with Q2 projected at $19.418 billion, up 23.7% y/o/y after 23.9% growth in Q1. The structural story centres on Prime Video’s ad-supported tier, which now reaches 315 million monthly viewers worldwide. Higher Prime Video CPMs or faster demand-side platform activity would be potential catalysts.

Third, Amazon’s expanded partnership with Anthropic includes a commitment for Anthropic to spend more than $100 billion on AWS technologies over the next decade. The agreement also gives Anthropic access to up to 5 GW of current and future generations of Amazon’s Trainium chips to train and run advanced AI models. Analysts were broadly positive on the expanded partnership, viewing the 10-year, $100 billion commitment as reinforcing AWS’s strong position in frontier AI infrastructure. Following a similar OpenAI deal in February, the rapidly growing backlog is seen by some as de-risking Amazon’s $200 billion 2026 CapEx guidance and potentially lifting H2 and longer-term revenue forecasts.

As the last of this week’s hyperscalers to report, Amazon’s AWS margin trajectory will serve as a key test of the debate Alphabet opened last week: whether AI infrastructure spending is delivering visible operating leverage or expanding the capital base against which returns must be measured.

▪ Martin Marietta Materials also reports Thursday before the open, with the call at 10:00 am EDT. Consensus anticipates EPS of $4.76, a decline of 12.4% y/o/y, reflecting diesel-cost headwinds that management has quantified at approximately $36 million within the Aggregates segment and roughly $50 million company-wide, concentrated most heavily in Q2. Revenue is anticipated to reach $1.870 billion, up 3.3% y/o/y, with full-year mid-point EBITDA guidance reaffirmed at $2.430 billion excluding pending acquisitions. Q2 follows a record Q1, when revenue reached a first-quarter high of $1.362 billion.

The Aggregates segment is the key driver and the two variables are pricing and volume. The segment anticipated to account for 81.7% of Q2 revenue at $1.527 billion, up 15.7% y/o/y and 33.7% q/o/q, and contribute 85.6% of gross income in Q2 at $463 billion, up 7.6% y/o/y and 60.7% q/o/q. Pricing power has historically been resilient given the high transportation costs that limit competition from distant producers, effectively giving incumbent quarry operators regional pricing leverage. Volumes have been mixed, with infrastructure spending under the federal programme and, increasingly, data-centre construction offsetting residential softness.

Investors will also follow up on Martin Marietta’s 29 June announcement that it will combine with Lhoist North America, or LNA, a subsidiary of Lhoist Group, in a transaction valued at $13.5 billion. The Berghmans family is expected to own 15% of Martin Marietta after the close.

LNA operates 20 quarries and production facilities, together with 45 distribution terminals, and generates $1.8 billion in gross sales and $786 million of EBITDA. The asset base includes 2 billion tons of high-quality limestone reserves, representing more than 200 years of useful life. Initial investor reaction centred on the trailing 15.0x EV/EBITDA multiple, including $85 million of synergies, relative to Martin Marietta’s 19.4x multiple at the time of the acquisition. Investors also focussed on the 50% stock consideration and the expected increase in leverage to 3.7x after the close, which is likely to limit additional deal capacity in the near term. Strategically, the transaction expands Martin Marietta’s specialty business through LNA’s exposure to steel, highway and mega-projects, and water end markets, supported by a Texas base and broader Sunbelt footprint.

The same-day update call clarified the expected near-term impact on guidance. Combined 2026 revenue is projected at $9.1 billion, representing a 27.1% increase versus prior guidance of $7.160 billion, while synergised EBITDA is expected to reach $3.4 billion, up 39.9% versus the previous outlook. Management also expects the post-transaction margin profile to improve by more than 270 bps and FCF conversion to rise by more than 450 bps after the acquisition closes. Maintenance CapEx for the acquired business is estimated at 3% of sales, with one Texas expansion project underway. Following the transaction, the Specialties segment is expected to generate $1 billion of annual EBITDA at higher margins.

▪ Apple reports on Thursday after the close, at 4:30 pm EDT and the earnings call programmed at 5:00 pm EDT, in what is expected to be Tim Cook's final earnings call as Chief Executive before John Ternus assumes the role, with Kevan Parekh as CFO. Consensus EPS of $1.89, up 20.5% y/o/y, on revenue of $109.039 billion, up 16.0% y/o/y, consistent with management's guidance of 14.0% to 17.0% revenue growth.

The prior quarter was strong across the board: revenue of $111.184 billion, increased 16.6% y/o/y, EPS reached $2.01, up 21.8% y/o/y, Gross margin of 49.3%, the Services segment reached a record $30.976 billion and the board authorised an additional $100 billion of buybacks.

Four signals to look for. First, investors will focus on the durability of the iPhone 17 upgrade cycle, which has supported the past three quarters and now faces a more demanding comparison base. They will also assess how Apple’s late-June price increases, introduced in response to higher memory and component costs, affect unit-demand elasticity. iPhones were excluded from the current increases, although most investors expect any handset price adjustment to coincide with the iPhone 18 launch in September. Apple’s premium positioning, ecosystem pricing power and historically resilient demand should help limit meaningful churn. However, given the iPhone’s meaningful share of the Products segment, any material margin effect remains tied to potential pricing changes later in the year. For Q2, iPhone revenue is expected to reach $53.742 billion, up 20.6% y/o/y.

Second, Services growth and margin, the highest-quality earnings stream in the portfolio and the one most exposed to regulatory intervention. For Q2, Services revenue is projected at $31.414 billion, up 14.6% y/o/y. The segment’s Gross income is anticipated to increase 15.6% y/o/y to $23.961 billion, reflecting a 70 bps y/o/y Gross margin expansion to 76.3%, but a sequential contraction of 40 bps q/o/q.

Third, the Greater China geographic segment remains a key regional swing factor given past volatility tied to local competition from Huawei and periodic government-relations friction, while Mac and iPad both face ongoing supply constraints on newer models. For Q2, Greater China revenue is expected to increase 22.1% y/o/y to $18.771 billion, following a 28.1% y/o/y growth rate in Q1 and 37.9% in Q4.

Fourth will be Q3 guidance and the tariff cost line.

▪ Palantir reports on Monday after the close. Palantir guided Q2 revenue of $1.797 to 1.801 billion and raised its full-year 2026 guidance to $7.650 to $7.662 billion from the previous range of $7.182 to $7.198 billion. In Q1, both the US commercial segment, with y/o/y growth of 133.3%, and the US government segment, rising by 84.2% y/o/y, delivered growth that is accelerating ahead of estimates. For Q2, consensus estimates project EPS of $0.34, representing an increase of 115.2% compared to the prior year, and revenue of $1.812 billion, marking an 80.5% y/o/y gain. For Q2, revenue guidance is $1.797 billion to $1.801 billion.

Three signals for investor consideration. First, US commercial revenue and customer count. This segment is now guided by management to exceed 120% growth in Q2, reflecting accelerating adoption of the company's Artificial Intelligence Platform (AIP) among non-government enterprise customers, a shift that has been central to the bull case that Palantir is successfully diversifying beyond its government and defence-intelligence customer base. For Q2, consensus projects US Commercial revenue to be $716 million, up 133.8% y/o/y.

Second, US government revenue remains the larger segment in absolute terms and continues to benefit from defence and intelligence-community contract expansion. Investors will compare its growth rate with the Commercial segment to assess whether Palantir’s lofty valuation is increasingly supported by a broader, more diversified customer base.

Third, Operating margin. Management has guided Q2 Operating income to $1.063 billion to $1.067 billion, and Palantir’s Rule-of-40-plus profile remains a key distinction versus less profitable high-growth software peers.

Palantir represents the view that AI value accrues at the application layer. After a week in which investors rewarded picks-and-shovels suppliers and punished the platforms, its print will test the durability of the multiple attached to that thesis.

Last week’s themes and the bigger picture

AI CapEx under FCF scrutiny, industrials confirm the tariff-relief thesis, and defence and aerospace backlogs keep compounding

General Motors delivered a decisive beat, with EPS of $3.57 against a $3.19 consensus and revenue of $48.026 billion versus $47.012 billion expected. The company raised its full-year EBIT guidance for the second time in 2026, to $14 to $16 billion from $13.5 to $15.5 billion, and lifted full-year EPS guidance to $12 to $14. The segment detail was the story: GM North America EBIT rose 42.7% to $3.446 billion at a margin of 8.6%, an expansion of 2.5 percentage points, while GM International EBIT fell 6.6% to $190 million. GM Financial-s Operating income declined 14.1% to $605 million. Consolidated EBIT of $3.943 billion grew 29.8% at a margin of 8.2%. The print settles the tariff-resilience question for the domestic auto sector in the affirmative.

3M reported the same morning with a beat and a raise of its own. It posted an adjusted EPS of $2.40 versus $2.24 expected and revenue of $6.50 billion against $6.39 billion consensus. It raised the full-year adjusted EPS guidance to $8.80-8.95 and FCF to $4.7 to $4.9 billion. The Operating margin of 24.9% expanded 40 bps to the highest level in the company's history. Organic growth of 5.4% was led by Safety and Industrial revenue growth at 8.2%, with Consumer declining 1.8%. On costs, the tariff and stranded-cost headwinds were approximately $110 million in the quarter while oil-related inflation guidance was raised to $150 million to $175 million from $125 million. No tariff refunds have yet been received. Together, GM and 3M corroborate the thesis that domestic industrials are retaining genuine pricing power against tariff costs.

Halliburton also reported on 21 July, delivering its fourth consecutive beat with revenue of $5.714 billion against the $5.496 billion consensus and EPS of 55 cents, slightly above the 54 cents estimate. Completion and Production revenue of $3.202 billion increased 6.2% sequentially with operating income of $474 million at a 14.8% margin, while Drilling and Evaluation revenue of $2.512 billion improved 5.3% sequentially. The notable figure was the International geographic segment revenue of $3.438 billion, the highest Q2 in more than a decade, achieved despite the Middle East disruption that management had quantified at seven to nine cents per share. Q3 guidance calls for Completion and Production revenue flat to down 2% with margins improving 125 to 175 bps, Drilling and Evaluation down 3% to 5% with margins up 25 to 75 bps, and International revenue, excluding the Middle East, growing at a low double-digit rate. New awards included Iraqi field management, approximately 285 wells for Saudi Aramco and Suriname's first major deepwater offshore oil development, GranMorgu.

GE Vernova reported Wednesday and reset expectations again. Revenue rose 21.9% y/o/y to $11.104 billion, including 11.5% organic growth, ahead of the $10.790 billion consensus. EPS increased 42.9% y/o/y to $2.47 but missed the $3.17 estimate. EBITDA reached $1.250 billion, with the margin expanding 340 bps y/o/y to 11.3%. By segment, Power generated $5.477 billion of revenue at an 18.8% EBITDA margin, Electrification delivered $3.637 billion at an 18.4% margin and Wind posted a $275 million EBITDA loss on $2.026 billion of revenue. New Orders Value rose 95.2% y/o/y to $24.200 billion, driven by a 135.0% increase in Power orders to $16.729 billion, but a slower pace than Q1’s 120.0% y/o/y growth rate. This, coupled with the Backlog Value sequential decline of 10.5% q/o/q to $146.300 billion, below the $167.411 billion estimate, can help explain the stock’s subsequent performance. Notably, Q2 FCF of $5.107 billion exceeded the full-year 2025 total. Management raised full- year revenue guidance to $45.5 billion to $46.5 billion and lifted FCF guidance sharply to $11.5 billion to $12.5 billion from $6.5 billion to $7.5 billion. It kept the EBITDA margin outlook at 12.0% to 14.0%.

Alphabet reported on 22 July with the quarter that can redefine the season's arithmetic. Revenue increased 24.2% y/o/y to $119.796 billion, ahead of the $116.446 billion consensus. EPS of $9.11 significantly exceeded the $2.88 estimate, supported by a $98 billion net gain on equity securities. Excluding that gain, EPS would have been $2.94. Google Cloud revenue rose 81.8% y/o/y to $24.768 billion, with Operating income increasing to $8.814 billion from $2.177 billion a year earlier. Google Services revenue grew 14.5% y/o/y to $94.540 billion, supported by Search revenue growth of 16.8% y/o/y to $63.271 billion and YouTube Advertising growth of 12.9% y/o/y to $11.055 billion. Consolidated Operating income increased 30.4% y/o/y to $40.770 billion, while Operating margin expanded 200 bps y/o/y to 34.0%. The Cloud backlog reached $514 billion. However, Q2 CapEx of $44.924 billion pushed FCF to a $5.855 billion outflow, marking the company’s first quarter of negative FCF. Management also raised its full-year CapEx guidance to $195 billion to $205 billion from $180 billion to $190 billion. The result therefore captured the central tension of the season:exceptional operating performance accompanied by a material FCF sacrifice to fund the AI buildout. Alphabet’s shares performance since speaks for itself.

Tesla reported the same evening and presented the inverse of Alphabet’s dynamic: record deliveries and revenue were offset by a profitability disappointment. Revenue reached $28.236 billion, up 25.5% y/o/y and ahead of the $26.278 billion consensus, while EPS of $0.48 missed the $0.55 estimate despite a $1.005 billion gain on the company’s SpaceX holding. Automotive revenue rose 23.1% y/o/y to $20.516 billion, but gross margin of 16.9%, or 16.3% excluding regulatory credits, was well below the 19.4% expected. Operating income declined 57.1% y/o/y to $398 million, compressing the operating margin by 269 bps to 1.4%. CapEx increased 141.8% y/o/y to $5.789 billion, although FCF outflow of $1.092 billion was narrower than the $2.863 billion outflow modelled by the Street. The quarter confirmed that Tesla can still generate volume growth, but only at a meaningful cost to margin.

Lockheed Martin delivered the week’s most comprehensive beat on 23 July. Revenue increased 10.5% y/o/y to $20.063 billion, ahead of the $19.339 billion consensus, while EPS of $7.94 exceeded the $7.19 estimate and compared with $1.46 in the prior year, when results were affected by $1.600 billion of programme losses. Missiles and Fire Control was the key driver, with revenue up 18.9% y/o/y, supported by PAC-3, THAAD and Precision Strike Missile ramp-ups. FCF improved materially to $2.917 billion, reversing a $150 million outflow in the prior-year period. New orders of $65 billion lifted backlog to a record $230 billion, including a $35 billion multi-year THAAD interceptor contract. Management also raised full- year guidance to sales of $79.750 billion to $81.750 billion, EPS of $29.95 to $30.65 and FCF of $7 billion to $7.2 billion, although it lowered the Space profit outlook to reflect reduced United Launch Alliance equity earnings following the Vulcan anomaly. In addition, the company agreed to acquire Ultra Maritime for $3.450 billion.

RTX delivered a similarly strong result that same morning. Revenue of $24.708 billion comfortably exceeded the $22.892 billion consensus, while EPS of $1.89 came in ahead of the $1.66 estimate. Performance was broad-based across all three segments. Collins Aerospace revenue rose 7.7% y/o/y to $8.210 billion, or 12.9% organically, with operating profit increasing 9.7% to $1.370 billion. Pratt and Whitney revenue grew 16.5% y/o/y to $8.889 billion, supported by 25% growth in commercial aftermarket and 23% growth in military, which lifted operating profit 21.7% y/o/y to $740 million. Raytheon revenue increased 18.1% y/o/y to $8.269 billion, while operating profit advanced 28.9% to $1.043 billion. Raytheon bookings of $19.9 billion generated a 2.42x book-to-bill ratio, contributing to a total backlog of $289 billion. Management raised full-year guidance to sales of $95 billion to $96 billion, EPS of $7.10 to $7.25 and FCF of $8.5 billion to $8.75 billion, while also agreeing to sell Blue Canyon Technologies for approximately $620 million. The strength in commercial aftermarket activity further supports GE Aerospace’s thesis and establishes a demanding benchmark for Boeing this week.