Wall Street's AI rally is facing a big test as investors wait for quarterly earnings reports from major technology companies, including Meta Platforms and Tesla. Recent falls in AI stocks have raised doubts about whether the stock market rally can continue.AI stocks have fallen in recent days. Shares of chipmakers and technology hardware companies, including Dell Technologies, have also dropped sharply. These stocks have helped drive the growth of the US stock market over the past four years.

Investors are now becoming less sure about the future of AI stocks. The upcoming earnings reports could help them understand whether companies will make enough money from their huge investments in AI to justify their high stock prices, Reuters reported. Meta Platforms is among the key companies investors will watch next week. The company is one of several major technology firms, known as hyperscalers, that are spending heavily to build AI data centres and expand their computing infrastructure.

Other major companies reporting results include semiconductor firms Lam Research and Texas Instruments, along with Elon Musk-led companies SpaceX and Tesla. Their earnings could provide clues about demand for AI technology, chips and other technology-related products. Market experts say investors are becoming more cautious about AI. Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions, said the market's outlook had become uncertain, with investors questioning the current position of the AI industry, according to Reuters.

Concerns about how companies are financing their AI investments have also affected investor confidence. The AI infrastructure boom has helped increase profits across several industries and supported economic growth.

However, investors are now paying closer attention to the cost and risks of funding these projects. Microsoft pulls out of Nscale data center deal in UK amid power supply delays, report saysAI cloud company CoreWeave has become a major focus of these concerns. The company has about $50 billion in debt, and its shares fell sharply this week. Investors are watching its financial position as they assess the risks associated with borrowing money to expand AI infrastructure. Investment firms have also become more cautious about technology stocks.

Strategists at Deutsche Bank and RBC Capital Markets have separately reduced their recommendations on the technology sector. On October 9, Deutsche Bank strategists said the shift towards technology stocks had gone far and that the near-term risks no longer justified the potential rewards, according to Reuters. The S&P 500 recorded its biggest weekly fall since June. The decline was driven by losses in major technology and AI stocks. However, the index remained only about 2% below its record high reached earlier in October.

Other sectors performed better as technology stocks weakened. Healthcare and consumer staples, which had lagged behind during the previous month's technology-led rally, recorded solid gains during the week. This suggests investors may be shifting some money towards other parts of the market.AI continues to have a strong influence on the wider stock market. Garrett Melson of Natixis Investment Managers Solutions said AI-related investments often attract so much investor attention when they perform well that other sectors struggle to gain interest.

Meta earnings will test returns from AI spendingThe US corporate earnings season will become busier next week. Investors are hoping companies will report strong results.

According to LSEG IBES data, S&P 500 companies are expected to record earnings growth of more than 30% in the third quarter. Heavy spending on AI infrastructure is a major reason behind the expected increase in profits. Companies are investing large amounts of money in data centres, computing systems and other infrastructure needed to develop and operate AI technology. Investors want to know whether these investments will produce enough revenue and profits. Five major AI hyperscalers are expected to increase their combined capital spending to around $1.2 trillion next year.

According to Goldman Sachs, Meta is among these companies. The expected spending highlights how much money technology firms are committing to the AI industry. Gold IRAs offer physical gold for retirement, but higher fees and strict IRS rules pose challenges for investorsInvestors want to see whether these companies can earn more from AI than they spend building it. Kevin Shea, senior equity analyst at BNY Wealth, said an important factor during earnings season would be whether the profits of hyperscalers could grow faster than their capital expenditure, or spending on long-term assets and infrastructure, according to Reuters.

Meta's upcoming results could provide an important indication of whether its AI investments are paying off. The company's market value was about $1.8 trillion, and its shares had risen in recent weeks after it launched its Muse AI assistant. Investors will look for updates on its AI strategy and the returns expected from its spending. Rising borrowing costs could make AI investments more expensive. Chuck Carlson, chief executive of Horizon Investment Services, said the increase in capital spending would raise the level of returns investors expect from companies.

He added that Meta would be the first major company to offer more information on this issue during the upcoming earnings period. Chip stocks face pressure despite strong yearly gainsSemiconductor companies have benefited significantly from the AI investment boom, but their shares have recently lost momentum. Chipmakers supply important components used in AI systems and data centres, making them major beneficiaries of rising demand for computing power. The Philadelphia Semiconductor Index has fallen about 12% this month.

Despite the recent decline, the index remained up 57% so far in 2026. By comparison, the S&P 500 had gained around 12% over the same period. Investors will closely watch earnings from Lam Research and Texas Instruments on Wednesday. Their results could provide a wider picture of demand across the semiconductor industry and help investors understand whether chipmakers can maintain their growth. Both companies have recorded strong gains in 2026 despite recent concerns about technology stocks.

Lam Research shares were up 54% for the year, while Texas Instruments shares had gained 59%, according to Reuters. Their upcoming reports could influence investor sentiment towards semiconductor stocks. Tesla, SpaceX and other major companies in focusTesla and SpaceX will also attract investor attention next week. Both companies are led by Elon Musk and have market values well above $1 trillion, according to Reuters. Their results are expected to be important for investors following the technology-driven stock market rally.

SpaceX is a newly public space company with an AI business. Investors will be watching its financial performance as they assess the prospects of businesses operating across the space and AI industries. Tesla, meanwhile, remains another major stock associated with the technology-led market rally. Several major companies outside the AI and semiconductor industries will also report earnings.

These include streaming company Netflix, consumer products maker Procter & Gamble and aircraft engine manufacturer GE Aerospace. Their results could offer investors a broader view of business conditions across different industries. Inflation and Federal Reserve rate decisions remain importantRising US Treasury yields are another worry for stock market investors. When yields go up, companies may have to pay more to borrow money. This can also make bonds more attractive than stocks.

Investors are also watching whether the Federal Reserve will raise interest rates again.US inflation data released this week was higher than expected. This increased fears that the Federal Reserve may raise interest rates again. Investors are now closely watching the Fed's policy meeting at the end of October to understand what it may do next. However, most futures market predictions still pointed to a possible rate hike in December. Investors largely expected the Federal Reserve to wait until its December meeting before raising interest rates for the second time this year, Reuters reported.

Trump policies to cost middle-income Americans $1,700 more in 2026, while richest 1% save $12,560: ReportStrong company earnings could help the US stock market handle a small increase in interest rates. UBS Global Wealth Management analysts said in a note on Thursday that another strong earnings season could support stocks even if interest rates rise slightly. The coming week could be important for Wall Street. Earnings reports from Meta, Tesla, major chipmakers and other big companies will help investors understand whether strong profits can keep the AI-driven stock market rally going despite rising costs, concerns about borrowing money and uncertainty over interest rates.