Two critical balance sheets for Wall Street

US markets are locked in for the second-quarter earnings season. Among the balance sheets, those of technology companies will be particularly prominent. Tesla and Alphabet’s balance sheets will reveal the course of demand for electric vehicles and artificial intelligence. Tesla and Google’s owner Alphabet will be the first of the large-scale tech giants, known as the Magnificent Seven, to report their second-quarter earnings. According to Bloomberg, analysts are expected to focus on the progress of Tesla’s robot taxi plans and Alphabet’s on the details of its revenue growth from artificial intelligence. Tesla’s operating margin is expected to have narrowed for the sixth consecutive quarter despite recent staff reductions — possibly by as much as 20 percent of the headcount it started the year with. Bloomberg Intelligence predicts that the impact of AI will help Alphabet boost its Google Cloud revenue and YouTube ad sales. The company’s total revenue is expected to increase by 13 percent, nearly double the rate a year ago. Investors have recently started to shift from technology stocks to riskier, more lagging stocks in the face of expectations of a Fed rate cut and concerns that a Trump win in the U.S. election could mean more trade restrictions. That rotation has seen shares of big tech companies, which have driven the rally in U.S. stocks for most of the year, fall last week. But despite the recent selling pressure, about two-thirds of the 463 respondents to Bloomberg’s Markets Live Pulse survey expect the latest round of earnings to boost the S&P 500.