High Expectations All Around
Earnings are back in the spotlight... The Mag Seven get going again... High expectations all around... Good news, bad news... Here's to 'True Innovations'... The 'Last Pure Human'...
It's time for another round...
As we wrote last week, it's earnings season again. Big banks got things going by beating expectations and raking in cash in the second quarter of 2026, thanks in part to the SpaceX (SPCX) initial public offering ("IPO").
The next batch of earnings will come after tomorrow's close, with two of the Magnificent Seven reporting – Alphabet (GOOGL) and Tesla (TSLA). Microsoft (MSFT), Meta Platforms (META), Apple (AAPL), and Amazon (AMZN) all report next week.
Once again, the market will be interested in capital spending on AI-related business. As we've seen this year, continued spending plans – even with more debt financing them – have kept the AI-fueled bull market going.
As a group, Mag Seven companies have pledged more than $700 billion in capital spending for 2026, with much of that directed toward AI data centers, chips, and infrastructure.
Data-center build-outs and related infrastructure activity have almost single-handedly made U.S. GDP growth closer to 2% than 1% or less.
The expectations...
Heading into this round, the Mag Seven companies are expected to report earnings growth that's greater than the other 493 companies in the S&P 500 Index, as has been the case over the last several quarters. As FactSet's John Butters wrote in a note yesterday...
For Q2 2026, the estimated (year-over-year) earnings growth rate for the "Magnificent 7" companies is 31.1%. On the other hand, the blended (combines actual and estimated results) earnings growth rate for the remaining 493 companies in the S&P 500 for the second quarter is 22.8%.
What the hyperscalers report and signal about their guidance and return on investment (or lack thereof) will be important to note, as will how the market perceives the information.
The Mag Seven account for 31% of the market-cap-weighted S&P 500. That's for better or worse...
But the 'other 493' aren't supposed to be too shabby, either...
The "rest" of the market might prop things up, even if the Mag Seven falter. If the "S&P 493" meet expectations for earnings growth of 22.8% for the quarter, it will be the highest year-over-year growth rate for the group since the fourth quarter of 2021.
Interestingly, that was also a time of high(er) inflation. It was just before the Federal Reserve dropped the hammer on the market by signaling the start of interest-rate hikes – kicking off a bear market. We're not there yet. But we may be getting closer...
As for earnings season, it's still early. About 10% of S&P 500 companies have reported, and more than 85% have delivered a positive earnings-per-share surprise. We'll have a report on the start of Mag Seven earnings in Thursday's edition.
The Strait of Hormuz is 'closed' again... And get ready for more tariffs...
As the war in Iran ventures deeper into quagmire territory, tanker traffic through the Strait of Hormuz has dropped to around 20% of prewar levels. Tonnage volume was down to near 10% of prewar levels today, according to hormuzstraitmonitor.com, which collects info from various sources.
Meanwhile, oil futures were up again today – by about 2%, to new highs for the month. Brent crude September contracts are trading around $91 per barrel, and West Texas Intermediate August contracts are near $85.
War risk is on the rise again. At the very least, expect volatility in oil prices.
And tariff threats are coming back, too.
Yesterday, the White House announced new tariffs to come next month on things like Canadian hockey sticks and beer (no, not the Labatt Blue!). U.S. Trade Representative Jamieson Greer said on CNBC today that "we expect to see some action soon" on additional tariffs as the White House seeks to negotiate trade policy through different means from those the Supreme Court struck down earlier this year.
About SpaceX (again)...
We hate to keep piling on about SpaceX, but we feel obliged to point out the continued risks for the stock a little more than one month after its IPO.
In his free daily e-letter last Friday, Stansberry's Investment Advisory lead editor Whitney Tilson shared his latest warning about owning shares of what he says is the "most overvalued large-cap stock of all time."
Today marked its first positive day after seven trading sessions where it closed lower. But the stock is still down more than 40% from its intraday high on June 16 – SpaceX's third trading day on the public market.
While folks who bought the IPO are already likely underwater, more price pressure may be ahead. Insiders got a clearer blueprint for selling shares today when SpaceX announced it will make its first earnings report on August 4.
Early investors will be able to sell 20% of their "locked up" shares two days after the report. Who's to say whether they'll all do so immediately, but there will be an opportunity that wasn't there before for more than 900 million shares of the stock to be sold.
We suspect at least some of those shares will hit the market. And, given the structure of the IPO, even more shares will become available as time goes on, which fundamentally supports lower prices.
Here's to 'True Innovations'...
Lastly today, here's a housekeeping note and an opportunity worth investing in...
As Stansberry Alliance members were made aware of in a note last week, our newest editor, Josh Baylin, is taking the helm of our technology-focused service, the newly renamed True Innovations Report.
Josh has spent more than two decades at the intersection of Wall Street and Silicon Valley. He started out as a tech reporter for Bloomberg's Washington, D.C. bureau. He then worked as a trader for Steve Cohen's hedge fund SAC Capital Advisors and as a sell-side researcher for asset-management firm Legg Mason.
Throughout his career, Josh has used "alternative data" to learn where the "smart money" is going before the rest of Wall Street sees it.
Josh looks beyond the standard financial reports and analyses. He seeks out things like credit-card transactions, shipping volumes, web traffic, app downloads, and social sentiment to see where the next big innovations will emerge.
Beginning in 2025, Josh brought his tech insights to Stansberry Research, where he launched our Mosaic Trader service this past spring.
Now, Josh's unique perspective will complement the great research subscribers have been getting from Innovations Report editor and analyst John Engel, including Hall of Fame-worthy returns on a pair of AI-related positions.
The first issue of True Innovations Report hit subscribers' inboxes on Friday. It was all about the "greatest investable transition of our lives" and the idea that the "Last Pure Human" is being born "somewhere in the world, right now."
Existing Innovations Report subscribers and Alliance members can get the full story here.
New 52-week highs (as of 7/20/26): Alpha Architect 1-3 Month Box Fund (BOXX), Chemed (CHE), Kayne Anderson Energy Infrastructure Fund (KYN), LXP Industrial Trust (LXP), Altria (MO), Marathon Petroleum (MPC), Plains All American Pipeline (PAA), and Valero Energy (VLO).
A quiet mailbag today. As always, send your questions, comments, gripes, or praise to feedback@stansberryresearch.com.
All the best,
Corey McLaughlin
Baltimore, Maryland
July 21, 2026