Amazon's shares experience a decline, arising from disappointing results in their AWS sector
The tech industry is abuzz with anticipation as some of the biggest names in tech prepare to release their earnings reports this week. Apple, Amazon, Meta (Facebook), and Microsoft are all set to reveal their financial performance, with investors closely watching for signs of progress in the AI race and the impact of tariffs.
Apple's share price has taken a hit this year, falling 16.5% in the year to date. The company has already flagged a $900 million hit to its profits as a result of tariffs, a concern that is likely to come under scrutiny during tonight's earnings call.
Meanwhile, Apple's rival, Meta, is set to discuss its Superintelligence Lab and plans to develop AI that surpasses human intelligence. Meta's stock has gained 12% in out-of-hours trading since it reported a 22% revenue rise and a massive 38% increase in earnings. Analysts expect Meta to have revenue of $44.8 billion and earnings per share of $5.88 for their results this week.
In the AI race, both Meta and Microsoft have demonstrated that spending big on AI is already delivering profits. However, Apple will need to demonstrate to the market that it is not being left behind. Matt Britzman, senior equity analyst at Hargreaves Lansdown, stated that Apple Intelligence has so far failed to deliver the game-changing experience that was promised, so investors should watch out for any updates on new AI features.
Microsoft, on the other hand, is expected to join Nvidia in the $4 trillion market cap club when regular trading opens today. The company's share price gained 8.7% overnight, following a 24% year-on-year increase in its earnings. Microsoft's net income for the quarter increased 24% year-on-year to $27.2 billion. The company's Intelligent Cloud revenue for the quarter was $29.88 billion, exceeding the expected $28.92 billion.
Analysts are closely watching Microsoft's cloud revenue platform, Azure, for its growth and potential impact on earnings. Scott Devitt, managing director, Equity Research at Wedbush Securities, expects AWS revenue to increase by 16% year-on-year in these results.
Amazon's share price looks set to catch some of the positive fallout from Microsoft's big earnings beat yesterday. Amazon: EPS of $1.33 and sales of $162.2 billion. Analysts are also closely watching Amazon's investments into AI and expecting signs of return on these investments in their results.
The debate over whether AI is delivering tangible returns is over, according to Matt Britzman, senior equity analyst at Hargreaves Lansdown. However, the focus will be on deeper metrics rather than just the headline numbers.
Nvidia is expected to report strong growth with earnings per share (EPS) estimated at about $0.99, representing a year-over-year increase of approximately 45.6%. Morgan Stanley has raised Nvidia’s price target to $200, driven by "exceptional demand" for Nvidia’s new Blackwell GPUs that are already outpacing supply, particularly from hyperscalers and enterprise customers investing heavily in AI infrastructure.
The tech giants' earnings reports will be closely watched not just for financial performance but also for their strategies in the AI race. While tariffs pose a threat to some companies, particularly those with reliant supply chains overseas, the focus remains on innovation and profitability in this rapidly evolving industry.
The earnings calls for Microsoft, Meta, Apple, and Amazon are scheduled for the evening of July 29 and July 30, with after-hours trading continuing until 4am BST on the day after their results are announced.
Investors will scrutinize Apple's earnings call tonight, especially considering the $900 million hit to its profits due to tariffs and concerns about progress in the AI race.
Microsoft, in the AI race, is anticipated to showcase significant growth in its cloud revenue platform, Azure, with analysts like Scott Devitt looking for a 16% year-on-year increase in Amazon's AI investments.
