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Another huge batch of corporate earnings including from megacaps Alphabet and Amazon will test the US stock market in the coming ‌week after a disappointing report from heavyweight Microsoft weighed on equity indexes. Wall Street also will ‌focus on the monthly US jobs ‍report due on February 6. This week, the Federal Reserve pointed to signs of stabilisation in the labour market as the US central bank paused ⁠its interest rate-cutting cycle.With the stock market entering ⁠the fourth year of a bull market, investors have been wary of rising valuations, particularly for high-flying names benefiting ‍from optimism over artificial-intelligence driven profits.Microsoft, which has spent massively on infrastructure to support AI applications, saw its shares battered on Thursday after its cloud business failed to impress, while software shares were broadly punished amid further disappointment elsewhere in the industry."For those companies where expectations have become very, very lofty, the onus is going to be on them to deliver," said Jim Baird, chief investment officer with Plante Moran Financial Advisors. "Even if they show growth, if it is growth that is not up to the expectations of the market, there is ‌a risk there that their stock price could be punished."Despite dipping on Thursday, the benchmark S&P 500 remained up nearly 2% for the year and near record-high levels. The index earlier in the week broke above the 7,000 level for the first ‍time, before pulling back.About one quarter ‌of the S&P 500 is set to report quarterly results in the coming week, with strong expected US profit growth a key source of optimism underpinning bullish outlooks for equities in 2026.Of 133 S&P 500 companies that reported results as of Thursday, 74.4% posted earnings above analysts' expectations, slightly below the 78% rate over the prior four quarters, according to LSEG IBES. Fourth-quarter earnings are expected to have climbed 10.2% from a year earlier. In contrast to Microsoft, Meta Platforms -- another megacap company and major AI spender -- posted strong sales in its quarterly report that boosted its shares.Investors will now focus on results and capital spending plans from Google parent Alphabet and Amazon, two other AI-focused "hyperscalers"."Although investor reaction to earnings announcements from a couple of the hyperscalers was mixed, it did confirm that capex spending on building out AI infrastructure will not ​see any let up," said Sid Vaidya, chief ‌investment strategist at TD Wealth.Other companies set to report next week include weight-loss drugmaker Eli Lilly, chipmaker Advanced Micro Devices and media giant Walt Disney. S&P ⁠500 companies overall are expected to increase earnings by ‍15% in 2026, putting their financial outlooks under the microscope."The stock market is largely reflecting the positive fundamentals that are driving that, and earnings growth is the biggest component of that," Vaidya said.The coming week's jobs report will also give Wall Street a critical look at the economy's health. The nonfarm payrolls report for January is expected to show growth of 70,000, according to a Reuters poll.Data flow is normalising following the lag effects ​from the 43-day government shutdown late last year that delayed key economic reports. The monthly consumer price index, closely watched for inflation trends, is due the following week."We haven't really gotten a lot of clean looks at the state of the labour market and inflation because of that government shutdown last year, so we think those are going to probably be more important than usual," said Michael Reynolds, vice president of investment strategy at Glenmede.Following Wednesday's Fed meeting, markets are now pricing in the central bank to hold off on further rate cuts until its June meeting, although any surprise weakening in the labour market could sway those expectations."The broad sense is that the ⁠economy is on a decent growth trajectory here going forward, and I would expect that that alone should help to provide a little bit of a floor under payrolls," Baird said. 

Alphabet Inc shares are suddenly unshackled after a long-awaited antitrust ruling removed a key risk that’s weighed on the stock for months.The decision by a US district court judge on Tuesday enabled Google’s parent to avoid the most punitive measures sought by regulators, including the sale of its Chrome browser. That sent the stock up nearly 11% over the past three days, including Friday’s 0.7% advance. The climb has put it within striking distance of a $3tn market value. With the case now out of the way, investors are turning their attention back to the potential for gains in Alphabet’s stock, which is the cheapest among the Magnificent Seven despite the recent rally.“What it does is it clears the runway for additional growth opportunities,” said Neville Javeri, senior fund manager at Allspring Global Investments, referring to the ruling. He sees an “incredible opportunity” in the stock as the decision “sets them up for a growth opportunity that might have been taken away.”The ruling caps a strong stretch for Alphabet shares that began after its second-quarter earnings showed demand for artificial intelligence products is lifting sales. At the same time, its AI offerings continue to boost investor confidence in Alphabet’s ability to fend off competition from rivals like OpenAI.The stock has gained more than 20% since the July 23 earnings report, vaulting Alphabet into the top third of performers in the Nasdaq 100 Index this year, after months of struggles amid concerns about antitrust risks and fears that AI upstarts could eat away at its Google search business, which accounts for more than half of revenue. As recently as June, Alphabet shares were down more than 10% while the Nasdaq 100 was in positive territory.Though the debate over AI is unlikely to be settled anytime soon, Wall Street is increasingly confident Alphabet can defend its turf. It debuted AI functions that were widely praised earlier this year, and the latest version of its Pixel phones, which come loaded with AI features, were also well received. Sales of handsets from both Alphabet and Samsung Electronics indicate consumers are willing to switch to devices that use Google’s Android operating system.“Given new AI Search features and GOOG’s rapidly scaling Gemini app, we expect Google will maintain its leadership in traditional search,” TD Cowen analyst John Blackledge wrote in a note to clients on Wednesday.With a market capitalisation of $2.83tn, Alphabet is roughly 6% shy of the $3tn mark, a level that’s only been reached by Apple Inc, Microsoft Corp, and Nvidia Corp.Closing that gap may not be much of a stretch. Alphabet trades around 21 times estimated earnings, compared with 26 times for the Nasdaq 100, and its revenues are expected to grow 14% this year, outpacing the benchmark.“The stock still looks attractive, since it has so many high-quality businesses growing at fast rates,” said Liam McGarrity, US investment analyst at Harris Oakmark, which has Alphabet as its largest holding.Despite the improving sentiment, Alphabet’s momentum could be difficult to sustain in the near term. The stock’s 14-day relative strength index jumped above 84, its highest since 2017 and well above 70, the level where technical traders consider a security overbought. The shares are trading slightly above with average analyst price target, suggesting Wall Street doesn’t see much upside from here.Investors “understandably are relieved that near-term risks are dissipated,” but “long-term concerns about competitive risks to search will constrain the multiple,” Rosenblatt Securities analyst Barton Crockett wrote in a note to clients Wednesday, reiterating his neutral rating on the stock.For McGarrity, owning Alphabet comes down to believing in its ability to stay ahead of AI rivals and maintain growth.“When you consider it is cheaper than the market even though it has industry-leading AI and significant potential in businesses like Google Cloud and Waymo, then it seems like it is trading at a significant discount,” he said.