Microsoft, Shopify and 3 more AI stocks that are favorite Wall Street earnings plays

Investors observed a significant decrease on Wall Street on Friday (October 16), as the core AI-related technology stocks faced renewed pressure. CoreWeave, Broadcom, and other related companies experienced additional losses. The Nasdaq extended its declines from earlier in the week, influenced by worries that debt-ridden AI infrastructure companies might not generate enough profits to repay their debts, especially with expectations of rising borrowing costs.

Nvidia-backed CoreWeave suffered the most, while the data center operator's bonds yielded sharply above 15 percent this week. Broadcom and the PHLX chip index also declined, marking the eighth consecutive day of losses. Rising oil prices, up more than 3 percent due to Middle East supply concerns, weighed on traders' sentiment, especially as high oil prices tend to negatively impact stocks' price/earnings multiples.

Rob Haworth, a senior investment strategist at US Bank Wealth Management, expressed caution, stating that investors are likely to be cautious in the coming weekend rather than take more risks. Concerns over AI financing have also arisen, as some existing and potential investors in Anthropic are considering a lower valuation for the company in its upcoming initial public offering, according to Reuters.

The S&P 500 lost 85.44 points or 1.1 percent to end at 7,658.62 points, while the Nasdaq Composite fell 572.99 points or 2.2 percent to 26,137.85. The Dow Jones Industrial Average dropped 189.01 points or 0.4 percent to 51,990.05. The third-quarter earnings season will begin next week with reports from Tesla, Meta Platforms, and Procter & Gamble.

Analysts on average expect quarterly earnings to surge more than 30 percent, driven by AI-related megacaps, according to LSEG data. The S&P 500 remains up about 12 percent in 2026, but most of that gain has come from AI-related tech stocks, and the index's median component has only climbed about 6 percent year-to-date. Approximately 185 S&P 500 stocks have lost ground in 2026.

Inflation reports this week have revealed that price pressures are extending beyond energy commodities. Federal Reserve Chair Kevin Warsh expressed optimism about the US economic strength but surprise at the resilience of global economies during a persistent energy shock and tighter monetary policy to combat inflation. Markets are increasingly expecting the Fed to maintain interest rates unchanged this month.

Barclays now anticipates 25-basis-point hikes in December and January. Tesla experienced a drop following the unveiling of a redesigned Roadster, powered by rocket-style thrusters, in collaboration with SpaceX. Netflix appointed former Disney executive Peter Rice as chief content officer, causing its shares to dip.