It was a rough week for big tech. The Nasdaq fell 1.5% on Thursday, July 17, dragged down by a global selloff in semiconductor stocks and a sharp drop in Netflix shares. Japan's Nikkei fell 4%. Taiwan's market dropped 6.5%. Chip stocks led the declines as investors reassessed the valuations that have driven the AI trade for the past two years.
But not all selloffs are created equal. Two names in particular are worth understanding this weekend: Netflix (NFLX), which just reported earnings and got punished for its guidance, and Alphabet (GOOGL), which reports Q2 2026 results the week of July 21 and has quietly become one of the more interesting risk-reward setups in large-cap tech.
Netflix: The Drop That Has Analysts Disagreeing
Netflix reported Q2 2026 earnings on Wednesday, July 16. The headline numbers were fine — revenue came in at $12.56 billion, up 2.5% sequentially from $12.25 billion in Q1 2026. Diluted EPS was $0.80. Gross margin was 51.9%.
What crushed the stock was the guidance. Netflix issued weaker-than-expected Q3 2026 revenue and earnings forecasts, and the market responded immediately. Shares fell roughly 10% in premarket trading on July 17 and continued lower during the session.
At Friday's price of $69.23, Netflix has now fallen 45.4% from its 52-week high of $126.71. The 52-week low is $65.09, meaning the stock is hovering just above its lowest point of the past year. Market cap sits at $291.51 billion. Trailing EPS is $3.10, and the P/E ratio is 22.33.
One number from Q2 stands out as a concern: net income fell from $5.28 billion in Q1 2026 to $3.40 billion in Q2 2026 — a steep sequential compression. Net margin dropped from 43% in Q1 to 27.1% in Q2. Netflix attributed part of this to content investment timing and currency headwinds, but analysts are watching closely to see whether the margin compression is temporary or structural.
Wall Street is split. Of 16 analysts covering Netflix, 75.0% remain bullish even after slashing their price targets. Morgan Stanley maintained Overweight on July 17 but cut its target from $90.00 to $83.00. Oppenheimer maintained Outperform but lowered its target from $100.00 to $85.00. Rosenblatt holds Neutral with a $75.00 target. The average price target across all analysts is now $93.44, which still implies 35.0% upside from the current price. The high target is $125.00. Bears argue the guidance miss signals peak subscriber monetization. Bulls argue the selloff is overdone given Netflix's unmatched content library, 300 million-plus global subscriber base, and growing advertising tier.
The honest assessment: at $69.23, Netflix is trading near its floor. The 35.0% gap between current price and the analyst consensus target is not nothing. But the path back depends entirely on whether Q3 guidance proves conservative or accurate.
Alphabet: The Setup Before the Report
While Netflix absorbed its punishment this week, Alphabet has been quietly pulling back. GOOGL shares trade at $344.59, down 15.7% from the 52-week high of $408.61. The 52-week low is $183.71. Market cap is $4.17 trillion. Trailing EPS is $13.11 and the P/E ratio is 26.28 — inexpensive by mega-cap AI standards.
The most recent quarterly data, from Q1 2026, showed a business running at extraordinary scale. Revenue came in at $109.90 billion, and net income reached $62.58 billion. Diluted EPS was $5.11. Gross margin was 62.4% and net margin was 56.9%. Those are among the strongest profitability numbers in Alphabet's history, driven by Search, YouTube, and the rapid growth of Google Cloud.
Q1 revenue was down slightly from Q4 2025's $113.83 billion, a seasonal pattern that is typical for Alphabet. The sequential dip of 3.5% is consistent with prior years and not a signal of deceleration.
Alphabet reports Q2 2026 results the week of July 21. Analysts are watching Google Cloud revenue growth most closely — Google Cloud crossed $12.00 billion in quarterly revenue in Q4 2025 and is growing faster than any other segment. AI-driven search enhancements and AI Overviews are also in focus after management indicated strong monetization progress on the Q1 call.
Of 21 analysts covering Alphabet, 81.0% carry bullish ratings. The average price target is $431.24, representing 25.1% upside from the current price. The high target is $515.00. Keybanc raised its target to $445.00 on July 10, 2026, maintaining Overweight. Mizuho holds Outperform with a $460.00 target. Wells Fargo carries Overweight with a $416.00 target. Citizens has a Market Outperform rating with a $515.00 target.
With earnings on deck and the stock sitting 15.7% off its high, Alphabet enters Q2 reporting season as one of the cleaner setups in the market. A beat-and-raise would close a meaningful portion of that gap quickly.
Found this helpful? Share it with others.