Global stock markets are struggling to establish a recovery on Monday, as investor sentiment remains cautious following recent volatility. European indices and defensive stocks are outperforming, while technology stocks continue to face pressure.

Investors remain concerned about elevated valuations, substantial AI infrastructure spending, and whether these investments will generate sufficient returns. With major corporate earnings and central bank decisions approaching, market participants are closely monitoring developments that could determine the next direction for global equities.

Upcoming earnings reports:

• Visa - 27 October - AMC | +17.70% in 2026 (vital for market sentiment)
• Coca-Cola - 27 October - BMO | +34.00% in 2026 (vital for market sentiment)
• Alphabet - 28 October - AMC | +0.60% in 2026 (Influential for the NASDAQ and S&P 500)
• Microsoft - 28 October - AMC | +10.90% in 2026 (Influential for the NASDAQ and S&P 500)
• Amazon - 29 October - AMC | +9.49% in 2026 (Influential for the NASDAQ and S&P 500)
• Intel - 29th October - AMC | +120.00% in 2026 (Influential for the NASDAQ and S&P 500)
• Mastercard - 29 October - BMO | +10.70% in 2026 (vital for market sentiment)
• Caterpillar - 29 October - AMC | +14.80% in 2026 (Influential for the Dow Jones)

NASDAQ Attempting a Rebound?

The NASDAQ is trading at a 8% discount from its October highs, and earnings reports have so far not been able to improve sentiment. The issue for investors is the level of risk, which is on the rise due to higher inflation, oil prices, interest rate hikes, and AI spending.

Investors are concerned that substantial AI spending may not generate sufficient earnings growth to justify the elevated price-to-earnings (P/E) ratios of major technology companies. Companies are now borrowing more money than ever before, with CAPEX being solely invested in AI products. This is a concern for investors, particularly as market conditions are deteriorating and many fear that stocks are overpriced.

Over the past three to four years the NASDAQ has risen 105%, an increase which has not been seen since the 1990s. After the previous increase, which mirrored this, the dot-com bubble followed.

The key for investors is whether the upcoming earnings can boost sentiment and lower investors’ concerns, Particularly if companies prove they are monetizing AI-products and earnings beat expectations. By doing so, investors will see the Price to Earnings ratio fall and expect it to continue falling.

NASDAQ - Earnings

Of particular importance will be the earnings reports from Alphabet, Microsoft, and Amazon. The three companies alone make up more than 25% of the NASDAQ weighting.

Analysts expect Alphabet’s revenue to rise approximately 25% year-on-year to $127.9 billion, while earnings per share are forecast at $3.03, representing growth of around 5.6%. Investors will focus particularly on Google Cloud, advertising revenue, and whether the company’s substantial AI investments are generating sufficient returns.

Despite expectations of strong revenue growth, concerns remain that rising infrastructure costs could pressure profitability. Better-than-expected earnings and positive guidance could support Alphabet shares and the NASDAQ. The same applies for Microsoft and Amazon.

If all three companies are able to beat expectations and boost sentiment, investors may increase demand. This may also allow a full rebound to above $31,000 if the Federal Reserve does not adopt a more hawkish tone and oil prices decline.

The NASDAQ continues to trade within a narrow range as investors await clearer signals to determine its next direction. The average resistance level is $29,141.00. If the price rises above this level, it is likely to generate a buy signal.

In the short term buy signals can arise above $29,090, however, traders should be cautious of the multiple resistance levels. On the other hand, if the price falls below $28,878.64 and earnings are weak, the bearish outlook could gain momentum.

Key Takeaways:

• The NASDAQ struggles to recover as concerns over AI spending, elevated valuations, and weakening sentiment continue to pressure stocks.
• Investors question whether substantial AI infrastructure investments will generate sufficient earnings growth to justify high price-to-earnings (P/E) ratios.
• Upcoming earnings from Alphabet, Microsoft, and Amazon could significantly influence the NASDAQ’s direction and broader stock market sentiment.
• The NASDAQ remains approximately 8% below its October highs, with investors closely monitoring earnings, Federal Reserve guidance, and oil prices.