This week, tech giants including Tesla will report earnings, and the sustainability of the U.S. stock market rebound will be put to the test.

October 20 — U.S. tech stocks rebounded on Monday after a heavy sell-off, but whether the market can truly stabilize still depends on whether this week's earnings reports from major tech companies can prove that the profit outlook for the AI investment boom remains solid. Earnings from major tech companies such as Meta Platforms and Tesla this week will be a key test, and SpaceX also plans to report results after the close on Tuesday.

Ajay Rajadhyaksha, global research chairman at Barclays, said this week's tech corporate earnings are crucial. Given that recent stock price action remains fragile, Barclays has shifted its stance on risk assets to neutral.

Katie Stockton, founder of Fairlead Strategies, also noted that the S&P 500 and Nasdaq need to hold key support levels this week, otherwise it could further confirm a market breakdown. However, she believes that widespread short-term oversold conditions are temporarily helping to support the market.

Ron Albahary, chief investment officer at LNW, said companies seen as beneficiaries of AI investment need to prove that actual earnings can meet the growth expectations already reflected in their share prices. He believes that the risk in this market cycle is not necessarily a valuation bubble like the dot-com era, but more likely a bubble in earnings expectations themselves.

Sameer Samana, global head of equities and real assets at the Wells Fargo Investment Institute, views the recent pullback in AI trades as a "reality check" rather than a complete collapse of the entire rally. However, he still expects related stocks may remain under pressure in the coming days and even weeks.

Samana said Wells Fargo had previously downgraded the tech sector because market expectations were overly optimistic. Although the recent sell-off has unwound some of that optimism, the correction may not be over and could last until around the U.S. midterm elections. He also noted that the politicization of AI and data center construction issues may continue to affect market sentiment.