Alphabet, Tesla and Musk have much to prove this week

So far, second-quarter earnings have surprised and nicely so. The Standard & 500 Index seems on track to report earnings growth of 5.6% for the second quarter and maybe 9% for the year.

Unless, of course, something happens to derail those expectations. Like tariffs that come out of left field. 

💵💰Don’t miss the move: Subscribe to TheStreet’s free daily newsletter 💰

The stock market ended the week not expecting something out of left field. The S&P 500, Nasdaq and Nasdaq-100 all hit new closing highs on Thursday, and Nvidia’s market cap is still above $4 trillion. 

Futures trading suggests a modestly higher open on Monday.

We’ll get a better feel for the prospects in the week ahead when the earnings season ramps up and 112 S&P 500 companies report results. 

The total includes two magnificent seven companies Google-parent Alphabet  (GOOGL)  and electric-vehicle maker Tesla  (TSLA)  after Wednesday’s close. 

Related: The stock market is being led by a new group of winners

Tesla’s shares been battered by competition from Chinese electric vehicle maker BYD and others and backlash from CEO Elon Musk’s involvement with the Trump Administration.  

The total also includes five components of the Dow Jones Industrial Average: 

• Verizon Communications  (VZ)  on Monday morning.
• Coca-Cola  (KO)  and Sherwin-Williams  (SHW)  on Tuesday morning.
• IBM  (IBM)  after Wednesday’s close.
• Honeywell International  (HON) on Thursday.

IBM is the top performing Dow stock in 2025, up 30%, and is the 30th-best S&P 500 performer. Coca-Cola is the Dow’s 12th best, up 12.2% (but only 148th best on the S&P 500). The other three are up less than 5%.  

Palantir  (PLTR)  is the top S&P performer, up 103%, followed by GE Vernova  (GEV) , up nearly 75%, and Howmet Aerospace  (HWM) , up 74%. Howmet makes precision metal products like jet engines, titanium products for the aerospace customers and forged aluminum wheels for trucks. GE Vernova reports Wednesday.

Related: Veteran trader turns heads with Netflix earnings review

An important report for Alphabet 

Alphabet is expected to report earnings of $2.16 a share, up 14.3% from a year ago on revenue of $87.9 billion, a 3.8% increase. 

As with Nvidia  (NVDA) , Microsoft  (MSFT) , Facebook-parent Meta Platforms  (META) , Apple  (AAPL) , and Broadcom  (AVGO) , Alphabet is expected to spend billions in 2025 on building out artificial intelligence capabilities, computers, peripherals, data centers around the world, etc. Alphabet has estimated its 2025 capital spending at $75 billion.

To lessen the financial blow, it has announced it will offer buyouts to thousands of employees. 

Plus, its Waymo self-driving taxi service is expanding and expected to see more competition from Tesla’s Robotaxi.

Alphabet shares are down 2.2% this year after rising 38.3% in 2024.

Given the stock’s underperformance this year, analysts will surely want to know is how much — and when — all the investments will start to flow to the bottom line.

Related: Why the Federal Reserve matters so much

Tesla still has a definition issue 

In Tesla’s problems are more complex. The stock was up 5.2% this past week to $329.65, with the market cap above $1 trillion again. 

Still, the shares are down 18.4% this year and off nearly a third from their 52-week high reached on Dec. 28. They gained 62.5% in 2024.

It now has to convince investors that the company is fully engaged again. CEO Elon Musk is now more directly involved in managing the company after working with Donald Trump — and having a spectacular falling out with the president.

VCG/Getty Images

Musk says he’s sleeping again in the office again. 

Musk’s political involvement with President Trump and embrace of MAGA values have alienated him with many of Tesla’s core customers. And Tesla has struggled in China and Europe against intense competition Chinese electric-vehicle makers, especially BYD.  

But it’s not just whether Musk is engaged. He and Tesla need to offer time lines on new and updated models due between now and 2028. These include:

• A refreshed Model Y with a seven-seater option.
• Refreshes of the Model X and Model S. 
• Low-cost versions of the Model Y and Model 3, 
• Its new Roaster 
• A Robotaxi.
• A Robovan. 

My guess he will be asked to specify whether Tesla is a vehicle company with a solar business and a robotaxi business, or, as he’s said before, an artificial intelligence business.

A railroad deal in offing?

The Wall Street Journal reported Friday that Union Pacific  (UNP)  and Norfolk Southern NSC are are talking a merger.

A deal, if it comes to pass, would create the largest rail operator in the United States.

UP’s system runs from the Midwest to the West Coast and competes primarily against Burlington Northern, owned by Warren Buffett’s Berkshire Hathaway  (BRK.A) . and  (BRK.B) .

Bloomberg/Getty Images

Norfolk Southern, which operates mainly in the South, saw its shares jump 2.5% to $276.66 on Friday. Union Pacific fell 1.2% to $224.87.

The two companies are two of the three largest rail companies in the United States.

• Standard & Poor’s announced after Friday’s close that Block  (XYZ)  will join the S&P 500 replacing Hess Corp., which merged this past week with Chevron Corp.  (CVX) . Block is best-known for its Square point-of-sale system and its Cash App digital wallet. Block’s CEO is Jack Dorsey, The stock joins the index before the open on July 23. On Friday, S&P added digital marketing company The Trade Desk  (TTD)  to the index replacing Ansys, which was acquired by chip-design company Synopsis  (SNPS) .

More Wall Street Analysts:

• Analysts reboot Olive Garden parent’s stock price targets as earnings loom
• Analysts revamp forecast for Nvidia-backed AI stock
• Intuitive Surgical analyst raises eyebrows with new stock price target

Also reporting this week

Monday

• NXP Semiconductors  (NXPI) , after the close.
• Dominos Pizza,  (DPZ) , before the open.
• Insurance giant W.R. Berkley  (WRB) , after the close.
• Zions Bancorp  (ZION) , after close.

Tuesday

• Automotive giant General Motors  (GM) , before the open.
• Chip-maker Texas Instruments  (TXN) .
• Surgical equipment company, Intuitive Surgical  (ISRG)  after the close.
• Defense contractor Lockheed Martin  (LMT) , before the open.
• Home builder D.R. Horton  (DHI) .
• Oil-services giant Baker Hughes  (BKR)  before the open.

Wednesday

• Telecommunications giant AT&T  (T) .
• T-Mobile  (TMUS) , after the close.
• Service Now  (NOW) , after the close.
• Copper producer Freeport-McMoRan  (FCX) , before the open.
• Chipotle Mexican Grill CMG, after the close. 

Thursday

• Private-equity giant Blackstone  (BX) , before the open.
• Gold producer Newmont  (NEM) , after the close.
• Chipmaker Intel  (INTC) , after the close.
• Railroad giant Union Pacific  (UNP)  before the open.
• Southwest Airlines  (LUV)  before the open.

Friday

• HCA Healthcare  (HCA) , before the open.
• Cable operator Charter Communications  (CHTR) .
• Auto retailer Auto Nation  (AN) , before the open.
• Regional banking company Flagstar Financial,  (FBC)