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Tech Earnings to Set Market Tone
Most of the former "Magnificent 7" tech stocks will report this week, with investors keen to see whether the recent AI-driven market gains are set to continue or if the bubble is ready to pop.
Markets Volatile Ahead of News
Markets face a busy slate of corporate reports, with the major tech stocks that have been driving the recent gains in equities all set to report earnings on Wednesday and Thursday. Tesla reported earnings last week, setting a high bar for the market after posting better sales but not enough profit to beat high expectations. Apparently, investors weren't happy about large capital expenditures, which could be a theme for other tech stocks as traders look for reassurance that spending on AI and its infrastructure will continue. After this week's earnings, only Nvidia remains to report for the seven big tech firms. The tech-heavy Nasdaq has been rocketing higher to new records through the first week of earnings season, amid solid company reports so far and optimism that a US-China trade deal will be signed this week.
Azure is the Focus for Microsoft Earnings
Microsoft will report earnings after the market close on Wednesday, with analysts' consensus EPS of $3.66, up from $3.30 a year earlier. Revenue is projected to rise 15% in the same period, reaching $75.4 billion. Just ahead of earnings, the company announced a $40 billion deal with Nvidia for AI data centres. The company's cloud unit, Azure, will be in focus as investors seek to gauge demand for AI infrastructure that has powered the company's earnings lately.
Is AI Finally Supporting Google?
Google's parent, Alphabet, will report earnings after the close on Wednesday. The average analyst estimate is for EPS of $2.26, up from $2.12 a year ago. Revenue is projected to rise 13.4% over the last year to $100.1 billion. Analysts will be keen to see if the company's billions spent on AI to enhance its search functions are paying off. It's also an opportunity for CEO Sundar Pichai to address rumours that the company is close to signing a deal with AI startup Anthropic.
How Much is Meta Spending?
The social media company will report earnings after the market closes on Wednesday. The consensus among analysts is that EPS will come in at $6.70, up from $6.03 a year ago. In that time, sales are expected to have increased 21.7% to $49.4 billion. Continued ad spending is expected to support revenue from Facebook and Instagram units. But what traders are more likely to focus on is the $66-72 billion in capital expenditures on AI that CEO Mark Zuckerberg promised at the start of the year. Traders will likely want to know what the company is doing to keep abreast of AI competitors after the stock tumbled in the wake of rival OpenAI's success with AI video generator Sora earlier this month.
Apple Supported by iPhone Sales
The iPhone company will update investors after the market closes on Thursday. Analyst estimates see EPS jumping to $1.77 from $0.97 a year earlier. Sales are expected to crack triple digits, rising 7.7% to $102.2 billion. Strong sales of the company's newest iPhone 17 model recently led to a record-high share price, potentially setting high expectations for investors in its earnings report. Investors will be looking to the company's guidance for the crucial December quarter, which is typically its strongest. The average forecast is for sales of $131.4 billion, with EPS rising 5.5% to $2.53.
AWS in Focus For Amazon
Amazon's EPS is projected to rise to $1.56 from $1.43 when it reports earnings after the market close on Thursday. Sales are projected to increase 12% to $177.7 billion over the last year. Although the major retailer will garner attention for the insights it can provide on US consumer behaviour, investors are more likely to be interested in the company's cloud unit, which generates the most income growth. The recent outage that captured headlines occurred after the end of the quarter and won't affect earnings. Still, traders might be interested in the company providing an update on what it is doing to prevent future incidents.
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