What Last Week’s Earnings Really Tell Us About the Market Ahead

Earnings season is when investors ask a simple question: are companies doing well enough to justify their stock prices? Last week gave us a small preview—mostly big banks and one major chipmaker—but the market’s reaction was surprisingly clear about what it wants. And what it wants is growth, not stability.

Jaime Martinez Medina, Global Market Strategist at PU Prime commented:

Last week’s earnings releases offered an early but telling snapshot of what investors are rewarding and punishing, in the current market environment. While results from major U.S. banks and a key semiconductor leader were limited in number, the market’s reaction delivered a clear message: growth matters far more than stability.

Several large banks reported solid quarterly results, beating earnings expectations on the back of resilient loan activity, improved investment banking fees, and strong trading revenues. Yet, despite these beats, bank stocks declined. Investors looked past backward-looking profits and focused instead on rising cost pressures, regulatory uncertainty, and the expectation that future Federal Reserve rate cuts will compress net interest margins. In short, good results were not enough without a compelling growth outlook.

The contrast within the financial sector was notable. While traditional consumer-focused banks struggled, investment banks tied more closely to capital markets activity outperformed. Strong deal flow and trading momentum highlighted that exposure to growth-driven activity continues to attract capital, even within the same sector.

The tone of the earnings season shifted decisively after Taiwan Semiconductor Manufacturing Company (TSMC) released its results. Strong profit growth combined with a sharply higher capital expenditure plan sent a powerful signal that AI-related demand is not slowing, but accelerating. The company’s commitment to significantly increased spending reinforced confidence across the entire semiconductor supply chain, lifting shares of chipmakers, equipment suppliers, and AI leaders.

The broader takeaway is increasingly clear. In today’s market, beating earnings estimates is insufficient on its own. Investors are prioritizing forward-looking visibility, expansion plans, and demand momentum. Companies that demonstrate credible growth paths are being rewarded, while those offering stability without acceleration are being sidelined.

As more sectors report this week, attention will remain on guidance rather than past performance. With valuations elevated, the bar is high. This earnings season is likely to be solid overall, with growth continuing to command a premium across U.S. equities.”

Banks Beat Earnings and Still Got Punished

Here’s the part that confused a lot of people. JPMorgan, Bank of America, Wells Fargo, and Citigroup mostly beat their earnings numbers. They made solid profits on loans, investment banking picked up, trading desks did fine. On paper, everything looked good.

Their stocks fell anyway. Between 3% and 5%, depending on which bank you’re talking about.

JPMorgan Daily Chart (Source: TradingView)

Why? Because investors stopped caring about last quarter’s results and started worrying about three things that matter more.

The Washington Problem

Credit-card rate caps are being discussed. New capital rules might be coming. Nobody knows exactly what will happen, but the uncertainty alone is enough to make people nervous. When JPMorgan’s Jamie Dimon stood up and said expenses are jumping to $105 billion next year—that’s up from $96 billion—investors heard “our costs are going up” and tuned out the rest.

Second, Interest Rates

Banks have been printing money for two years because rates were high. But everyone expects the Fed to start cutting rates later this year, and when that happens, bank profits shrink. It doesn’t matter that last quarter was good. Investors are already pricing in a future where the easy money is over.

Investors Aren’t Interested in Boring Growth Stories

investors just aren’t interested in boring right now. They want companies that are growing, expanding, doing something exciting. Banks showed up with consistency. That’s not what’s getting rewarded in early 2026.

Wells Fargo Is the Perfect Example

Beat on earnings? Great. Still fell 4.6% because revenue missed and they’re paying $612 million to lay people off. Everyone thought Wells Fargo would finally start growing after getting out from under its regulatory problems last year. Instead, it looks like they’re still in cleanup mode.

Wells Fargo Daily Chart (Source: TradingView)

Deals Are Hot Right Now

Goldman Sachs and Morgan Stanley did great—up 4.6% and 5.8% respectively. Investment banking fees at Morgan Stanley jumped 47%. Goldman Sachs had record trading revenue. These banks make their money from deals, not consumer deposits. So while Main Street banking struggled, Wall Street banking thrived.

Goldman Sachs Daily Chart (Source: TradingView)

Then TSMC Changed the Conversation

Just when it looked like earnings season might be a disappointment, Taiwan Semiconductor Manufacturing Company came in and flipped the script entirely.

TSMC makes the actual chips for Nvidia, Apple, AMD—basically everyone who matters in tech. When TSMC talks, people listen because they’re sitting right in the middle of the entire supply chain. They know what’s really happening with demand.

And what did they say? Profit up 35%. That’s impressive. But the real headline was the spending plan: $52 billion to $56 billion on new factories and equipment in 2026. Last year they spent $41 billion. You don’t increase spending by that much unless you’re absolutely certain the demand is there.

Taiwan Semiconductor Daily Chart (Source: TradingView)

AI Is Real

The CEO addressed the elephant in the room directly. People keep asking if AI is a bubble. His answer? “AI is real.” He said he personally went and talked to the big cloud companies to verify the demand himself. That’s not corporate speak—that’s a CEO putting his credibility on the line.

Markets Responded Immediately

Markets responded immediately. TSMC up 6%. ASML, which makes the equipment TSMC buys, jumped 7-8% and crossed $500 billion in value. Nvidia up 3.2%. Even Intel and AMD, who compete against each other, both rallied because the underlying message was so strong.

Nvidia Daily Chart (Source: TradingView)

The takeaway was simple: AI chip demand isn’t slowing down. It’s speeding up.

What Investors Actually Care About Right Now

Last week made something very clear. You can beat earnings estimates and still watch your stock fall if you don’t have a growth story investors believe in. That’s what happened to the banks.

Growth Beats Stability Every Time

Growth beats stability every time in this market. Show rising demand and expansion plans, you get rewarded. Show solid-but-unremarkable results, your stock goes nowhere. Or worse, it goes down.

Tech and AI Companies Are Running the Show

Tech and AI companies are running the show right now. That’s just reality. The market’s gains over the past few years came mostly from this sector, so when tech does well, everything feels better. When tech stumbles, it drags everything else down with it.

You can see the same dynamic in the S&P 500: leadership has stayed concentrated in the growth-heavy parts of the market, so shifts in tech sentiment quickly ripple through the broader index.

S&P 500 Daily Chart (Source: TradingView)

Interest Rates Affect Pretty Much Everything

Interest rates are the other factor affecting pretty much everything. The Fed is always in the back of investors’ minds. What will they do? When will they cut? How much? Those expectations change how people value stocks across every sector. That’s why banks fell despite good numbers—future rate cuts matter more than past performance.

What to Watch This Week

A lot more companies report this week. Tech, consumer products, healthcare, manufacturing—the real test starts now.

Here’s what actually matters

Do other chip companies confirm what TSMC said? If yes, the AI story holds. If no, people will start questioning whether TSMC is the exception or the rule.

Are consumers still spending? Companies selling everyday stuff will tell us if people are still buying freely or starting to pull back. That affects everything from economic policy to whether we’re heading into rougher waters.

What are companies saying about 2026? Last quarter’s numbers are history. The year ahead is what counts. Stock prices are high, which means companies need to justify those valuations with credible plans.

How do stocks actually move after earnings? Don’t just look at whether a company beat or missed. Watch the stock reaction. That tells you what investors really think about the business, not just the quarter.

Bottom Line

Last week didn’t reveal any disasters. Tech and AI are still growing. The economy looks stable. But stable isn’t enough to get rewarded anymore. The market wants growth, and it’s not being subtle about it.

For regular investors, the lesson is straightforward: beating estimates doesn’t cut it by itself. Companies need to show they can keep growing, that they have advantages that last, that they’re executing well. Show those things, your stock does well. Don’t show them, you get left behind even if your current numbers look fine.

Right now the message is that things are okay, tech is driving confidence, and investors are careful but not panicking. This week will tell us a lot more. But based on what we saw last week, this earnings season should be decent overall—just very uneven depending on which sector you’re in.

Growth is what’s getting paid. Everything else is an afterthought.