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Issue No. 41 • Tuesday July 21, 2026

THE TRADING ADDICT

by Maria Helmick

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» Market Insight

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AI: FLYWHEEL OR FLYTRAP?

The spending cycle behind the AI boom — and what investors should watch next.

Wall Street is asking an important question right now: Are we witnessing the beginning of a long AI boom, or are companies spending so much money that the payoff may never come?

The encouraging view is that the recent weakness in semiconductor stocks looks more like investors taking profits than a sign that AI demand is falling apart. That is an important distinction.

After the incredible run we have seen in AI stocks, some cooling off should be expected. Markets do not move straight up forever, and pullbacks can be healthy after such large gains.

The bigger story is that the companies spending the most money on AI have not taken their foot off the gas. Microsoft, Amazon, Meta and Alphabet continue investing billions of dollars into data centers, AI servers, networking equipment and advanced chips.

One announcement that caught my attention was Microsoft's decision to use AMD's Helios rack system to help train AI models. That is another meaningful win for AMD and more evidence that large customers want more than one supplier for their AI infrastructure.

The AI Flywheel

Companies build more AI infrastructure. That infrastructure creates better AI models. Better AI attracts more customers. More customers create more demand, which leads to even more spending.

If that cycle continues, the opportunity reaches far beyond just one chip company. Chipmakers, memory companies, networking firms, power suppliers and data-center builders could all benefit.

Of course, there are risks. AI spending is enormous, and investors will eventually expect these multibillion-dollar investments to produce real revenue and profits.

That is why upcoming earnings reports from the major technology companies matter so much.

The market will be listening for one thing:

Are these companies still increasing AI spending, or are they beginning to tap the brakes?

Maria's Bottom Line

Bullish, But Not Blindly Bullish

I am still bullish on AI, but I am becoming more selective.

The AI flywheel reminds me of the wheel strategy in stocks: sell puts for income, take the shares if assigned, then sell covered calls. Each step keeps the cycle moving.

AI works the same way. More spending builds better systems, better systems attract more customers, and more customers lead to even more spending.

But just like the stock wheel, it only works if the underlying business is strong. That is why I am still bullish — but not blindly bullish. The wheel is turning, but investors still need to own the right companies.

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» Earnings Week

EARNINGS THIS WEEK — WHAT WALL STREET EXPECTS

A packed Tuesday, a monster Wednesday and a busy Thursday. These reports could set the tone for the AI trade heading into August.

Tuesday

Northrop Grumman (NOC) — EPS ~$6.82. Watch: revenue growth, defense backlog, B-21 spending, margins. Full-year revenue guidance ~$43.8B.

Capital One (COF) — EPS ~$4.69. Watch: credit-card delinquencies, charge-offs, loan growth, Discover integration costs.

Charles Schwab (SCHW) — EPS ~$1.56. Watch: client assets, deposits, trading activity, net-interest revenue.

General Motors (GM) — EPS ~$3.19. Watch: EV losses, N. American margins, tariff costs, full-year guidance.

3M (MMM) — EPS ~$2.25. Watch: organic sales, margins, free cash flow, legal costs.

Wednesday — The Biggest Day

Alphabet (GOOGL) — EPS ~$2.90 / Rev ~$116.9B (~21% growth). Watch: Google Cloud, Search, YouTube, Gemini adoption, AI capex. This may be the most important market-wide report of the week.

Tesla (TSLA) — EPS ~$0.54 / Rev ~$26.4B. Watch: automotive margins, ASPs, energy storage, Robotaxi, free cash flow. Could beat and still fall if margins or guidance disappoint.

GE Vernova (GEV) — EPS ~$3.19 / Rev ~$10.8B. Watch: gas-turbine orders, grid backlog, margins, guidance.

AT&T (T) — EPS ~$0.59. Watch: wireless adds, fiber, churn, FCF.

ServiceNow (NOW) — Watch: subscription growth, remaining contract value, enterprise spending, AI revenue.

IBM — EPS ~$2.91. Watch: software growth, Red Hat, AI bookings, free cash flow.

Thursday

Intel (INTC) — EPS $0.20-$0.22 adj / Rev $14.3-$14.4B. Watch: gross margins, data-center revenue, foundry losses, AI demand, guidance.

Lockheed Martin (LMT) — EPS ~$7.22. Watch: F-35 deliveries, missile production, backlog, cash flow.

American Express (AXP) — EPS ~$4.41. Watch: card spending, business travel, loan losses, credit quality.

T-Mobile (TMUS) ~$2.57 · Verizon (VZ) ~$1.28 · Comcast (CMCSA) ~$0.96 · Charter (CHTR) ~$10.00 · Union Pacific (UNP) ~$3.25 · Albertsons (ACI) ~$0.54 · American Airlines (AAL) ~$0.03.

Charter: subscriber numbers may matter more than EPS.

Maria's Bottom Line

Guidance and Margins Will Separate the Winners from the Losers

This should be an interesting earnings week, even though I don't have a direct horse in this race — at least not yet.

These reports could set the tone for the AI trade heading into August. I'll be watching Alphabet, Tesla and Intel most closely, with GE Vernova as another key read on AI infrastructure spending.

This week will not be about simply beating earnings estimates. Guidance, margins, customer growth and capital spending will separate the winners from the losers.

» Market Tidbit