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AI Bubble Fears Resurface Ahead of Bank Earnings; Google Edges Down 0.25%

Big bank earnings kick off Tuesday, with investment banking fees from the SpaceX IPO expected to fuel a blockbuster quarter. Meanwhile, tech stocks are under pressure as the AI-bubble debate reignites.

OurAlpha

13 Jul 2026 — 4 min read

AI bubble fears resurface as bank earnings season begins.

Major US banks report Q2 results before the bell Tuesday (July 14), with investment banking and trading revenue expected to surge on the back of the SpaceX IPO and geopolitical volatility. Tech stocks, meanwhile, remain under pressure as AI-bubble fears simmer. As of 1:30 PM ET on July 13, Google (GOOGL) was trading at $356.28, down 0.25% from the prior close.

JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, and Goldman Sachs report Tuesday; Morgan Stanley follows Wednesday.^CNBC
KBW analyst Chris McGratty expects investment banking revenue to rise 26% YoY and trading revenue to climb 14%.^CNBC
The SpaceX IPO generated hefty fee income for Goldman Sachs and Morgan Stanley, including debt underwriting and "soft-dollar" payments from hedge funds.^CNBC
Since SpaceX went public in early June, the Nasdaq has traded sideways, and most of the "Magnificent Seven" stocks have been sliding since peaking in late May/early June.^UnHerd
US export controls on Anthropic's Mythos and Fable models (later lifted), plus a shift from subscription to per-token AI pricing, have pushed overseas users toward Chinese models.^UnHerd
Financials have been the S&P 500's best-performing sector over the past month, up more than 7%, as the market looks to bank earnings for a read on consumer health.^{Business Insider}

Major US banks report Q2 results before the bell Tuesday (July 14), a key test for the recent market rally. According to CNBC, JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C), Wells Fargo (WFC), and Goldman Sachs (GS) report Tuesday, with Morgan Stanley (MS) following on Wednesday.^CNBC Meanwhile, tech stocks are under pressure as the debate over an AI investment bubble heats up. As of 1:30 PM ET on July 13, Google (GOOGL) was trading at $356.28, down 0.25% (-$0.90) from the prior close of $357.18, with an intraday range of $354.11 to $358.13.

SpaceX IPO & Geopolitical Volatility Fuel Investment Banking Revenue

KBW analyst Chris McGratty expects Wall Street's biggest banks to post a 26% YoY jump in Q2 investment banking revenue and a 14% gain in trading revenue.^CNBC A key driver: the SpaceX IPO. CNBC notes the listing generated hefty fees for Goldman Sachs and Morgan Stanley, including traditional debt underwriting and "soft-dollar" payments from hedge funds that received oversubscribed allocations.^CNBC Volatility tied to the Iran situation also created trading opportunities.

Business Insider reports that expectations are high for this earnings season. Every S&P 500 sector except healthcare is expected to post YoY profit growth.^{Business Insider} Financials have already rallied more than 7% over the past month, making them the S&P 500's best-performing sector. "The recent price action in bank stocks is constructive," Keefe, Bruyette & Woods analysts wrote in a note. "Discounted valuations and fundamental momentum are keeping the sector-rotation narrative alive. 'Higher for longer' is firmly embedded in expectations."^{Business Insider}

AI Bubble Debate Reignites: Did the SpaceX IPO Pop It?

As bank earnings take center stage, tech stocks—especially AI names—face growing scrutiny. A recent UnHerd analysis poses a pointed question: "Did SpaceX puncture the AI bubble?"^UnHerd The article notes that the Nasdaq has traded sideways since hitting an all-time high above 27,000 in early June. More notably, most of the "Magnificent Seven" stocks peaked in late May to early June and have been declining ever since.

SpaceX's own stock has also drawn attention. After briefly surging above $200 shortly after its IPO, the stock has since fallen more than 25%.^UnHerd Author John Rapley argues that large "hyperscaler" IPOs like SpaceX can suck significant capital out of the market, triggering a correction. Adding to the chill: on the day of the SpaceX IPO, the US government announced export controls on Anthropic's Mythos and Fable models. Though later lifted, the move sent a signal. Overseas AI users, suddenly aware of their vulnerability, began turning to Chinese-developed models as alternatives.^UnHerd

Cost Pressure & Export Controls Reshape the AI Landscape

The UnHerd analysis points to another key factor: cost. As US AI companies shift from subscription pricing to per-token fees, businesses are seeing costs spike with little clear productivity gain. To rein in spending, many are turning to slightly less capable but cheaper Chinese AI models.^UnHerd If this trend continues, it could challenge the global leadership of the US AI industry.

Business Insider echoes these concerns, noting that investor anxiety over tech companies potentially overspending on AI is rising. Memory and chip stocks—the market's hottest corners recently—have been hit by a selloff as money rotates out of crowded trades.^{Business Insider} Meanwhile, bank earnings with consumer exposure will offer a crucial update on the health of the US consumer, as spending remains the economy's main engine.

Earnings & Inflation Data: A Double Test Ahead

Market focus will be intense this week. In addition to bank earnings, the Labor Department releases the key June inflation report at 8:30 AM ET Tuesday.^{Business Insider} Investors will digest both corporate profits and inflation data to gauge the Fed's next rate move. JPMorgan strategists noted in a Friday report that Q2 is shaping up to be a broadly strong earnings season.^{Business Insider}