The AI rotation stole the spotlight from a strong start to earnings season

9:31 AM · July 18, 2026

The AI trade dominated markets again this week, overshadowing what was otherwise a strong start to the second quarter earnings season, according to CNBC. Investors spent the week rotating capital away from the companies building AI infrastructure and toward the companies buying and applying AI, a shift that weighed on chip and infrastructure names even as many companies posted solid quarterly results. Apple briefly overtook Nvidia to reclaim the title of the world's most valuable company by market capitalization during the week, a symbolic marker of the rotation given Nvidia's roughly year long run at the top. Despite the strong earnings backdrop, the major indexes still closed the week lower, with the S&P 500 down 1.6 percent and the Nasdaq off 2.9 percent. Sentiment was further pressured by the debut of a powerful new AI model from Chinese startup Moonshot, which the company said performs on par with leading systems from OpenAI and Anthropic, adding to investor unease about how durable the current leaders' advantages really are. The week's pattern, in which strong fundamentals were not enough to prevent a broad pullback in AI linked stocks, illustrates how sensitive the sector has become to shifting narratives about who ultimately captures AI's economic value.