TSMC AND U.S. BANK EARNINGS SET UP MAJOR TEST FOR AI AND VOLATILITY TRADE

Investors are entering a pivotal earnings week focused on Taiwan Semiconductor Manufacturing Company and major U.S. banks, according to Reuters. The results are expected to test two of the market's strongest recent themes: demand for artificial-intelligence chips and the ability of large banks to profit from market volatility.

Reuters reported that TSMC's second-quarter results are among the most closely watched reports in the coming week because the company is the world's largest contract chipmaker and a key supplier to the AI hardware chain. Investors are looking for evidence that demand for advanced chips remains strong enough to support elevated valuations across semiconductor and technology stocks.

The TSMC report follows SK Hynix's $26 billion U.S. share sale and continued investor enthusiasm for AI-linked hardware, according to Reuters. Reuters reported that chip demand may support stronger TSMC revenue forecasts and higher pricing, making the company's outlook important not only for Taiwan's market but also for U.S. technology shares, chip-equipment makers and broader AI-exposed indexes.

Reuters reported separately that global equity funds drew $49.23 billion in inflows during the week ending July 8, the highest in three weeks, with AI optimism helping drive risk appetite. The technology sector attracted $11.49 billion in inflows, while AI-sector earnings are expected to grow 54.2% year over year in the second quarter, according to Reuters' fund-flow report.

U.S. bank earnings will provide the other major market test. Reuters reported that JPMorgan Chase, Goldman Sachs and Morgan Stanley are among the large banks expected to report, with investors watching whether volatility has supported trading revenue. Bank results will also show whether loan demand, credit quality and dealmaking are improving or weakening as markets adjust to inflation, rates and geopolitical risk.

Reuters reported that broader corporate earnings are forecast to rise 23.4% year over year. That forecast gives the reporting season a high bar: if major banks, chipmakers or consumer-facing companies disappoint, investors may reassess whether recent stock gains are justified by actual profit growth.

Economic data will also shape the week. Reuters reported that U.S. inflation and retail-sales figures are expected to provide clues about the Federal Reserve's next moves under Chair Kevin Warsh. Inflation data will matter because stronger price pressure could reduce expectations for rate cuts, while weaker retail sales could raise concern that consumers are slowing.

Geopolitical risk remains part of the market backdrop. Reuters reported that U.S.-Iran friction around the Strait of Hormuz has increased oil-market volatility, with crude prices spiking and traders hedging against further price increases. Energy volatility can affect inflation expectations, airline and transport costs, consumer spending and central-bank policy assumptions.

The immediate question is whether earnings confirm the market's optimism or expose a gap between valuations and fundamentals. TSMC will test the AI hardware trade, banks will test the volatility and trading-revenue trade, and inflation and retail-sales data will test the interest-rate outlook that has supported risk assets.

Fact-check date: 10 July 2026
Article type: News
Sources: Reuters