NEW YORK (CNNMoney.com) -- Optimism has returned to the tech sector, but sentiment will be tested when Apple, IBM and Intel - some of the biggest names in the industry - report earnings next week.

Tech stocks languished this summer, in part owing to concerns the sharply slowing economy would dampen spending on new technology by businesses. But the mood has improved in the last few months - the tech-fueled Nasdaq rallied during the third quarter, bringing it back into positive territory for the year.

The tech-heavy Nasdaq has rebounded from the rough patch it hit in the summer.

The economy may be slowing but interest rates are stabilizing and energy and commodities prices have fallen dramatically, said Ryan Jacob, portfolio manager of the Jacob Internet Fund. That raises the earnings prospects for a number of sectors, including technology.

Sentiment is also upbeat because investors are expecting strong momentum for the market going into the holiday season, according to Paul Davis, portfolio manager of the Schwab Technology Fund.

But in the volatile tech sector, sentiment can shift rapidly, especially if guidance is disappointing. "An overall surprise on the downside could get us back to where we were in July. But the market is very positive right now. People are electing to look at things in a positive light," Davis said.

Here's a look at what industry followers are expecting from some of the tech heavyweights reporting next week.

IBM: The bellwether of the technology sector is expected to report earnings of $1.35 a share on revenue of $22.1 billion, a gain of 7 percent and 3 percent, respectively, over the same period a year ago.

Last quarter, the Armonk, N.Y.-based firm posted weaker-than-expected service bookings, a closely watched indicator of the company's performance, and many analysts will be watching for the company to report an upturn in those signings this quarter.

Kim Caughey, an analyst at Fort Pitt Capital Group whose firm owns shares of IBM (Charts), said she'll also be focusing on gross margins, a key measure of profitability, to see how the company is managing its transition to more higher-end businesses.

Big Blue, which faces the challenge of growing revenue as a $90 billion company, has been shifting away from its less profitable PC and display businesses in recent years and focusing more on higher-margin divisions like services and consulting.

In addition to bookings and margins, Caughey said she'll be watching the company's guidance to see what it says about business activity in the pipeline for the typically strong fourth quarter.

Intel: Expect more of the same when the biggest maker of chips for PCs reports earnings. Analysts are forecasting a 45 percent dive in earnings to 18 cents a share and a 13 percent slide in revenue to $8.6 billion.

The company has struggled with rival AMD (Charts) for the past few quarters and that dogfight shows no signs of waning. The battle is hurting Intel's gross margins. Last quarter, AMD posted gross margin of 56.8 versus Intel's 52.1. That's going to be something playing against the company when it reports for the third quarter, according to Daniel Morgan, a portfolio manager at Synovus Investment Advisors. His fund owns shares of Intel (Charts) but isn't actively buying more shares. AMD reports earnings Wednesday.

Intel, based in Santa Clara, Calif., has been trying to overhaul its business. In September it provided more details about its restructuring plan, saying it will cut 10,500 jobs and aim to save $5 billion over two years.

But it's still hard to see light at the end of the tunnel, Morgan said. "The big issues is where is Intel going to get growth going forward? They've become dependent on the PC business," he said.

Apple: Analysts expect sales to jump 27 percent to $4.7 billion from the same period a year ago and earnings, on a per-share basis, to surge 33 percent to 50 cents a share.

Apple's (Charts) back-to-school sales were healthy and lower component prices should boost the company's margins during the September quarter, Jonathan Hoopes, an analyst with ThinkEquity Partners, said.

While iPod sales have cooled from their explosive growth rates, sales of Apple's Macintosh computers have been growing. "The talk of town is what is Apple's share gain through the end of the year in terms of its desktop and notebook computers," he said.

Also, the mess surrounding stock options backdating looks like it's starting to clear. Earlier this month, Cupertino, Calif.-based Apple said CEO Steve Jobs was aware of some grants that were irregular but didn't benefit from them.

Now, it appears less likely that Jobs will have to leave Apple -- the worst case scenario analysts were predicting -- but the company isn't out of the clear and won't be until the matter is fully resolved, Hoopes said.

Hoopes does not own shares of Apple and his firm doesn't do investment banking for the company.

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