* Alphabet spending plans in focus in Wednesday results

* Intel ( INTC ), Texas Instruments ( TXN ) to report, with semis trade in

spotlight

* Tesla, American Express ( AXP ), RTX among other reports due

By Lewis Krauskopf

NEW YORK, July 17 (Reuters) - U.S. corporate earnings season

gathers steam in the coming week as Alphabet and Intel ( INTC )

are set to offer updates that could sway the

market-leading AI trade amid high profit expectations and

uncertainty over the Iran war.

The S&P 500 skidded on Friday to post a weekly

decline, dragged down by a steep pullback in high-flying

semiconductor shares. Still, the benchmark S&P 500 remained up

about 9% in 2026, and stood 2% below its early June record high.

Increasing expectations for profit strength this year have

provided bedrock support for investors' enthusiasm for stocks.

Now they are counting on the second-quarter earnings season,

just under way, to show the corporate profit engine is still

humming along, with S&P 500 earnings projected up a whopping 26%

in the period, according to LSEG IBES data.

"Headlines continue to raise anxiety and leave investors

scratching their heads wondering why the market continues to

reach new heights," said Michael Arone, chief investment

strategist at State Street Investment Management. "And the

reason it does is because the fundamentals have been resilient,

and the earnings continue to be outstanding."

ALPHABET IN FOCUS FOR AI SPENDING VIEW

Alphabet's quarterly report on Wednesday will command Wall

Street's attention. The Google parent, the third-largest U.S.

company by market value at $4.2 trillion, can jostle indexes as

one of the heavyweight "Magnificent Seven" stocks that have

driven U.S. equities higher for much of the bull run that has

lasted nearly four years.

The company is also an AI "hyperscaler," spending billions

of dollars to build out data centers and AI infrastructure. Such

AI capital spending has been at the heart of this year's market

rally, driving huge gains for semiconductors and other companies

benefiting from the massive outlays.

If Alphabet announces "any type of pullbacks with respect to

the spending that they're forecasting around AI, you could see

ripple effects across the entire AI ecosystem," said Kevin Mahn,

president and chief investment officer at Hennion & Walsh Asset

Management.

Results from semiconductor firms Intel ( INTC ) and Texas Instruments ( TXN )

take on particular significance due to the stunning

rally this year in chip stocks. The trade faltered in recent

weeks, with the Philadelphia SE Semiconductor Index

ending on Friday down over 20% from its late-June record high,

confirming it has been in a bear market.

Still, the index remains up more than 60% in 2026; Intel ( INTC )

shares have soared over 160%, while Texas Instruments ( TXN ) has gained

60%.

Tepid market reactions to strong reports this period from

foreign companies Samsung Electronics ( SSNLF ) and Taiwan

Semiconductor indicate the high expectations

for the semiconductor industry.

Chip stocks have swung widely as investors questioned

whether the torrid trade has run too far. The sector's massive

collective weighting in indexes means chip shares can influence

the market's direction. Leveraged products tied to the

semiconductor space are also "amplifying on both the upside and

the downside," said State Street's Arone.

Q2 REPORTS START TO FLOOD IN AS FED NEARS

Elon Musk's Tesla, another Magnificent Seven company,

is also set to post results in the coming week. Other

high-profile results include American Express ( AXP ), Philip

Morris International ( PM ) and defense contractor RTX,

with more than 80 S&P 500 companies expected to report.

Major U.S. banks kicked off the reporting season this week,

posting earnings boosted by fees for advising on mergers and

acquisitions and surging trading revenue.

Wall Street was still bracing for developments in the Middle

East to cause day-to-day market swings, following a recent

escalation of the nearly five-month-old U.S.-Israeli war with

Iran. Many investors expect the war to be relatively

short-lived, but are wary that renewed tensions could boost

energy prices up to levels they reached following the start of

the war, inflaming inflation fears.

That is especially an issue ahead of the Federal Reserve's

meeting at the end of July. Pricing in fed funds futures

indicates expectations the U.S. central bank will raise interest

rates in the coming months to bring down inflation that is above

the Fed's 2% annual target.

Cooler-than-expected data this week on U.S. consumer and

producer prices calmed some fears the Fed could raise rates at

this month's meeting.

"The macro data has painted a picture of a steady economy

with some improvement in inflationary pressure," said Eric Kuby,

chief investment officer at North Star Investment Management.