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The latest round of earnings could be the catalyst the market needs to turn AI stocks around.
As mid-July approaches, earnings season is set to intensify, with reports from key market players expected to shape investment trends for the coming months. The article anticipates positive news for artificial intelligence (AI) investors, forecasting increased AI spending through late 2026 and into 2027. In light of this, three particular AI-related stocks—Microsoft, Meta Platforms, and Taiwan Semiconductor Manufacturing—are highlighted as compelling buys before their upcoming earnings announcements, each offering unique reasons for potential investor excitement and post-earnings spikes.
Microsoft's stock has experienced a significant decline of nearly 21% in 2026, despite consistently strong financial results. In fiscal Q3 2026, the company reported an 18% year-over-year revenue increase and a 23% rise in earnings per share (EPS), driven by impressive AI growth and robust cloud computing performance. Despite these strong fundamentals, Microsoft trades at a forward earnings multiple of 20, which is lower than the S&P 500's 21.7. The author suggests that a continuation of this strong performance in the upcoming earnings report could prompt the market to re-evaluate Microsoft's valuation, making it an attractive purchase opportunity now before a potential stock rally.
Meta Platforms' stock is currently trading at a relatively low 18.7 times forward earnings, despite achieving an impressive 33% growth rate in the last quarter. While investors are keen on its core advertising business and ongoing AI advancements, the biggest potential catalyst is Meta's rumored entry into the cloud computing market. Unlike other major AI hyperscalers that already have established cloud services to fund their AI infrastructure, Meta's launch of such a platform could unlock significant value by monetizing its vast excess capacity. A positive announcement regarding this cloud business during its earnings call could lead to a substantial multi-digit surge in Meta's stock price, making it an appealing investment at its current levels.
Taiwan Semiconductor Manufacturing (TSMC), a crucial global chip foundry, is scheduled to release its earnings on July 16. Its report is expected to offer vital insights into the health and demand trends of the AI chip market. The article anticipates that TSMC will report continued strong chip demand, potentially indicating that the AI build-out is still in its early stages. Although TSMC trades at a higher forward earnings multiple of 27.5, which is considered expensive, this valuation is justified by its dominant market position, superior operational execution, and significant long-term growth prospects tied to the expanding AI sector. Investors expect management to reaffirm these positive long-term projections during the upcoming quarterly call.
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