Good afternoon, and welcome to our live blog covering a big week for big tech.
Four of the Magnificent Seven – Tesla, Microsoft, Meta and Apple – are announcing their latest results this week, along with the likes of ASML, IBM and SAP.
We’ll let you know exactly what to expect ahead of the major earnings announcements, as well as all the reaction and analysis once they’ve dropped.
Which of the Magnificent Seven are reporting earnings this week?
Meta, Microsoft, Tesla and Apple all report earnings this week. Meta, Microsoft and Tesla are reporting after US markets close (i.e. 9pm UK) on Wednesday, while Apple’s earnings are released the same time the following day.
This is followed by Google’s parent company Alphabet and Amazon next week, on 4 February and 6 February respectively.
Tech earnings: what's happened so far
Netflix – which once shared big-tech acronym status, back in the ‘FAANG’ days – then continued the momentum when it posted a revenue beat and a surprise acceleration in subscriber growth. Netflix (NASDAQ:NFLX) shares opened the next session 14.8% above their previous close.
See Katie Williams’ Netflix earnings write-up for the detail.
DeepSeek rocks the stock market
The S&P 500 fell 1.5% yesterday in response to the news, while the Nasdaq 100 – which is more heavily-skewed towards big tech stocks – fell 3.0%. Nvidia (NASDAQ:NVDA) stock fell 17.0%, as investors processed the notion that AI capability could potentially grow independently from demand for its chips.
Katie Williams has all the details covered in her deep dive into DeepSeek’s challenge of US big tech.
The $600 billion fall in Nvidia’s market cap is the largest single-day loss in US stock market history. In total, $1 trillion in market cap was reportedly erased yesterday by the news about DeepSeek. It should be said that much of this value has since been restored: Nvidia shares have today opened 2.9% up on last night's close.
Nvidia has made a habit of brushing off dips in its share price by posting financial results that blow expectations out of the water. If that’s to be the case this time around, investors have some time to wait before the bounce; Nvidia isn’t announcing earnings until late next month.
Is the bubble bursting?
“Pricing has got to levels which are high at the same time as there’s an interest rate risk, and that combination could prick the bubble,” Dalio told the FT.
Dalio compared the current phase of the AI boom to the run-up to the dot-com bubble’s burst. “There’s a major new technology that certainly will change the world and be successful. But some people are confusing that with the investments being successful,” he said.
While the rise of DeepSeek calls into question the potential profitability of Silicon Valley’s capital-intensive approach to developing AI, Dalio observed that “the tech war between China and the US is far more important than profitability, not only for economic superiority, but for military superiority”, adding that “those who are going to pay attention to profitability with sharp pencils are not going to win that race”.
Has Tesla been hit by DeepSeek?
Tesla’s shares fell 2.3% on Monday as part of the broader DeepSeek sell-off. The EV company invests heavily in AI and hopes to launch a fleet of driverless cars – known as robotaxis – doing paid rides later this year.
DeepSeek’s apparent success in creating a low-cost AI model has thrown Silicon Valley into a frenzy. It suggests the billions of dollars thrown at AI research and development in the US could have been used more efficiently.
“Tesla does not compete in large language models,” says Morningstar analyst Seth Goldstein. “We think the firm’s advantage in autonomous driving software comes from the billions of miles of full self-driving software testing and its ability to process that data to improve the software, not the AI cost,” he adds.
AllianzGI: DeepSeek doesn’t change the long-term story, but watch earnings calls closely
Jeremy Gleeson, chief investment officer, global tech equity at Allianz Global Investors, doesn’t think the news about DeepSeek changes the fundamental narrative around AI stocks.
“At the early stages of new technology development, it is normal to see standards changing or performance improving persistently,” he says.
While DeepSeek’s apparent upending of assumptions about the capital intensiveness of AI “have led to volatility seen in some share prices”, Gleeson reiterates that he views AI as “a long-term structural megatrend.
“It is also worth noting that this news flow has come at a time when many Asian markets are already closed or about to close for their Lunar New Year celebrations, and many Western companies are in their quiet period ahead of Q4 [earnings] reports,” he says. As such, they haven’t yet had a chance to respond directly to the stock market stir that DeepSeek has caused – but Gleeson told MoneyWeek that he expects the big tech companies announcing earnings this week, particularly those most directly linked with AI, will “spend some time commenting” on DeepSeek in their earnings calls.
“I think we'll be in a much more informed place come Wednesday evening or Thursday morning,” he said.
Meta and the open-source model
Another notable aspect of DeepSeek’s impressive AI results over the weekend was the fact that it is largely based on Llama, Meta’s (NASDAQ:META) generative AI large language model (LLM).
As such, Jeremy Gleeson, chief investment officer, global tech equity at Allianz Global Investors, questions the $5.6 million figure that has been reported as the cost of the model’s final training run.
“If [Meta’s] investment hadn't taken place in the first place, and [DeepSeek] had to do all that themselves, where would they be right now?” he asks.
This, however, leads into the discussion of the open-source model. DeepSeek is able to access Llama, because Llama is open-source – i.e. it is available freely to the wider tech community. Meta, and CEO Mark Zuckerberg, are committed to the model, but could opinions shift if open-sourcing LLMs gives competitors a competitive advantage?
“Something else we just don't know is, in commercial terms, is there a monetization opportunity for any provider of an LLM, even if it's open source?” asks Gleeson.
Thanks for joining us today. That concludes the live blog for this evening, but we'll be back tomorrow with more reaction to DeepSeek's impact on big tech shares, plus detailed previews of Meta, Microsoft and Tesla's earnings reports.
Good morning, and welcome back to our big tech earnings live blog. A big day coming up as Meta, Microsoft and Tesla announce earnings this evening.
Overnight, US tech stocks have begun to recover from the selloff following news that Chinese generative AI start-up DeepSeek could rival OpenAI’s performance at a fraction of the cost, without relying on cutting-edge chips.
DeepSeek highlights why diversification is key
“One of the persistent concerns for investors in recent years has been the growing concentration in the US stock market’s major indices,” says Tom Bailey, head of research at HANetf. “Many investors are now reevaluating concentration risks and exploring diversification strategies.”
“In situations like these, investors should be reminded of the importance of diversification, both across their portfolios and below the headlines,” says Matt Tickle, chief investment officer at independent consultancy Barnett Waddingham. “While the Mag7 are often considered tech stocks, their reach is much more diverse and spans several sectors of the market.
“It’s expected that the AI megatrend will continue, but sizing of exposure to any particular trend is key to managing risk,” adds Waddingham.
Similarly, Bailey reminds investors that “historically, industry leaders have struggled to retain their dominance over the long term”, citing former stock market giants like IBM, GE and Exxon as examples.
“AI is the most significant potential disruptor to today’s tech giants,” he adds – something of an irony, as their current levels of concentration in the stock market have come about largely thanks to the rise of AI.
Tesla earnings expectations
Let’s look at what each of the Mag Seven companies announcing earnings today are expected to reveal, starting with Tesla.
Tesla (NASDAQ:TSLA) is expected to post earnings per share of $0.77 on revenue of $27.2 billion for the fourth quarter of 2024, according to analysts polled by FactSet. Analysts polled by London Stock Exchange Group (LSEG – formerly Refinitiv) yield a consensus EPS estimate of $0.75, with the same revenue figure expected.
It’s notable that these estimates imply a second successive year-on-year decline in annual EPS, though LSEG’s poll predicts a rebound in 2025.
A surprise fall in vehicle deliveries caused Tesla shares to fall earlier in January.
The positivity surrounding Tesla following CEO Elon Musk’s close association with new president Donald Trump was dimmed somewhat when the company posted a fall in annual car deliveries for the first time since 2011.
Matt Britzman, senior equity analyst, Hargreaves Lansdown, thinks that “strong performance in the energy segment should offset the shortfall” in deliveries, but cautions that “margin concerns loom as Tesla relied on aggressive incentives to boost sales late in the quarter”. As well sizeable profit margins, Britzman believes that markets will be on the lookout for updates on a long-awaited affordable model, as well as “tangible progress in full self-driving technology”.
Microsoft earnings expectations
FactSet analysts expect Microsoft’s earnings to reach $3.11 per share for the most recent quarter, with a consensus revenue estimate of $68.9 billion. Analysts polled by LSEG expect revenue to come in a shade lower, but yield the same consensus earnings estimate.
LSEG’s estimates imply a 13.5% year-on-year increase in revenue, with annual EPS expected to increase by 10.1%.
Paddy Flood, portfolio manager and global sector specialist, and Simon Webber, head of global equities – both at Schroders – think that Microsoft, along with other large hyperscale companies, could in fact benefit from DeepSeek’s disruption of the AI landscape over the long term.
“Concerns have been growing around the potential returns on their substantial AI-related investments,” write Flood and Webber. “If this situation results in reduced spending requirements for these companies, it could lower their capital expenditure needs and drive significant increases in free cashflow generation.”
Meta earnings expectations
Meta (NASDAQ:META) is the third Magnificent Seven stock to announce earnings today. Analysts polled by FactSet forecast quarterly EPS of $6.76 on revenue of $46.99 billion. LSEG’s poll expects revenue to come in a shade over $47 billion, and EPS to come in at $6.77.
The most interesting aspect of Meta’s release, though, is likely to be management’s response to the DeepSeek news, especially given the extent to which DeepSeek has leveraged Meta’s LLM, Llama, in achieving its surprise results.
Kate Leaman, chief market analyst at AvaTrade, highlights the fact that providing Llama via the open-source model “is a double-edged sword for Meta.
“While it’s pushing AI technology forward, it’s also giving competitors like DeepSeek the tools to rise up and challenge Meta itself,” Leaman adds. She believes that open-sourcing Llama is at the heart of a long-term strategy for Meta which seeks to make the company “the foundation of the AI ecosystem”, even if that comes at the expense of profits in the short term.
ASML: Strong results offer relief amid DeepSeek sell-off
Fourth-quarter sales increased by 24%, coming in at €9.3 billion. This beat consensus estimates of €9 billion. Net bookings (which includes orders that have been placed but not yet delivered) looked even more impressive, jumping by 169% to €7.1 billion. Consensus estimates had pointed to €4 billion.
The stock has taken a knock in recent days as part of the wider DeepSeek sell-off, meaning the latest results will come as a welcome development. However, investors will still be keeping an eye on the risks associated with China’s apparent ability to develop AI models using fewer (and less sophisticated) chips.
Derren Nathan, head of equity research at Hargreaves Lansdown, says: “Given the emergence of DeepSeek, minds will be on the longer-term outlook for advanced semiconductor manufacturing equipment.
“The demand for ASML’s machines should benefit from the growing appetite for computing power. But how much of that is derived from the cutting edge ‘High NA’ machines remains to be seen.
“The good thing for ASML is that it has a dominant position in both very advanced and super advanced technologies. Export controls are one thing high on people’s minds, but for now, the impact feels well baked into guidance, with any weakness in China likely to be offset by strength in the US, Taiwan and beyond.”
When do Meta, Microsoft and Tesla announce their results?
That happens at 4pm in New York – 9pm in the UK.
In some instances, some of the most informative updates could come about in the post-earnings calls that the companies host with analysts. These don’t start until 10pm UK in Meta’s case, and 10.30pm for both Tesla and Microsoft.
While US markets will be closed by the time earnings are released, the companies’ share prices could still change in after-hours trading.
However, as always in investing – and especially when investing in growth industries like tech and AI – it’s best to take a long term approach, and not to get too caught up in the volatility that often occurs immediately before and after earnings releases.
What to watch out for in big tech earnings
Kate Leaman, chief market analyst at AvaTrade, says that the key things to watch out for in today’s earnings releases will be the companies’ signals as to their long term strategy, particularly as it pertains to AI.
As far as Tesla is concerned, “we’re watching for Tesla's outlook on new electric vehicle models planned for 2025, projected auto sales growth, and any updates on their robotaxi ambitions,” she tells MoneyWeek. “There's also interest in how the company's heavy AI investments may be impacted by recent developments like DeepSeek.
“For Microsoft, Meta, and Apple, key focus areas will be their AI infrastructure investments, particularly spending on Nvidia GPUs, and how they plan to leverage or respond to emerging AI technologies. Also, investors will be keen to hear about each company's strategies for integrating AI into their product ecosystems and any potential impacts on their financial outlooks.”
AI costs in the spotlight for Meta
“Social media giant Meta is facing steep expectations as it prepares to report its fourth-quarter and full-year results on Wednesday night.,” says Sam North, markets analyst at eToro. Its big spending on AI has boosted sentiment around the company, and helped Meta shares gain 45% over the past six months. That could be about to change, though.
“Meta’s previous guidance pointed to ‘significant acceleration in infrastructure expense growth’ for 2025, but – if reports are to be believed – the new open-source DeepSeek reasoning model costs significantly less to train than leading US-developed AI models, while being, in some ways, more effective,” says North.
That will put Meta’s costs – which ballooned in 2024 following a “belt-tightening phase” the previous year – under the spotlight.
“We saw shockwaves reverberate through the tech industry on Monday. Now, with a few days to digest DeepSeek’s announcement, it will be fascinating to discover how much credence Mark Zuckerberg gives to this potential avenue for lower-cost LLMs,” says North.
Meta, Microsoft and Tesla earnings expectations
Company | Forecast EPS | Forecast revenue |
|---|---|---|
Meta | $6.76 | $46.99 billion |
Microsoft | $3.11 | $68.87 billion |
Tesla | $0.77 | $27.22 billion |
Source: FactSet
These figures represent the median estimate among the pool of analysts polled. They don’t tend to be exactly accurate – and investors shouldn’t rely too heavily on them.
You’d be forgiven for thinking that beating these expectations would prompt an increase in companies’ share price, but this isn’t always the case, particularly where the Magnificent Seven are concerned.
Other factors such as forward guidance and management responses to analysts’ questions during earnings calls can have a much greater impact than the headline numbers, as these give a stronger indication of how the company might perform in the future.
All that said, it’s best for investors to take a long-term approach and not get too bogged down in the short-term price swings that tend to accompany earnings announcements.
What could a tech selloff mean for your money?
That might not sound like a bad thing, particularly if you’ve never bought any of their shares directly. However, given their saturation of the stock market, you may well be more exposed than you realise.
“UK investors might feel a million miles away from Silicon Valley, but their pensions and investment portfolios are probably brimming with US technology stocks,” says Laith Khalaf, head of investment analysis at AJ Bell. While these have served investors and savers well over recent years, and could continue to do so, “the recent wobble in stock prices stemming from DeepSeek’s new large language model highlights the risks to incumbents in the tech sector from the AI arms race that is currently underway”.
“The Global and North America fund sectors are two of the most popular destinations for UK investors, commanding £331 billion of assets under management, according to Investment Association data,” says Khalaf. A preference for passive rather than active funds will also have left UK investors particularly exposed: “an S&P 500 tracker fund now has a third of its portfolio invested in these seven companies. A typical global tracker fund has around three quarters of its portfolio invested in the US, and consequently just under a quarter of its portfolio invested in the Magnificent Seven,” Khalaf observes.
These are potential diversification strategies – it’s certainly not the time to sell up entirely on the Magnificent Seven yet. “But the potential for upheaval as the AI race progresses might mitigate in favour of a more thoughtful, nuanced approach to investing in these companies,” says Khalaf.
Markets so far
We’re about two hours away from the close of US markets today, and the release of the first big tech earnings reports for the latest quarter.
Outlook key for Tesla shares?
Additionally, Tesla states: "Our purpose-built Robotaxi product – Cybercab – will continue to pursue a revolutionary “unboxed” manufacturing strategy and is scheduled for volume production starting in 2026."
Zuckerberg addresses DeepSeek and open-source
In response to a question on the open-source model during Meta’s earnings call, CEO Mark Zuckerberg reiterated his commitment to the open-source model and why he sees being at the centre of the AI ecosystem as strategically important.
“In light of some of the recent news from China, and DeepSeek… one of the things that we’re talking about is, there’s going to be an open-source standard globally," he said.
“I think it’s very important for our advantage that that is an American standard. So we take that seriously, and we want to build the AI system that people are using, and I think that, if anything, the recent news has only strengthened our conviction that this is the right thing for us to be focused on.”
We're going to leave the live blog here for this evening, but there's plenty more detail to come.
Good morning, and welcome back to our coverage of big tech earnings season.
Recap: Tesla gains on future hopes, Microsoft could be in deep trouble
What lifted Tesla shares to a 4.1% gain in after-hours trading was renewed optimism for what Elon Musk’s company has coming up next.
“Tesla investors are fuelled by optimism around Full Self-Driving (FSD) and the upcoming affordable model - two key catalysts that could drive Tesla’s next leg of growth,” says Matt Britzman, senior equity analyst, Hargreaves Lansdown. “Self-driving remains central to justifying Tesla’s lofty valuation, with the long-term bet resting on software-driven profits and autonomy.
“Meanwhile, the low-cost model is crucial for delivering growth in what’s shaping up to be a tough EV market next year, and investors will take comfort in Tesla sticking to a first-half 2025 timeline.’’
CEO Satya Nadella brushed off questions about what DeepSeek means for Microsoft, especially given its hefty investments in OpenAI, saying that “what's happening with AI is no different than what was happening with the regular compute cycle. It's always about bending the curve and then putting more points up the curve”. He also mentioned that Microsoft is making DeepSeek available to its users via Copilot and on Windows PCs.
Investors clearly aren’t convinced, though, perhaps because these outward attempts to appear relaxed and amiable towards DeepSeek clash with reports that Microsoft and OpenAI are exploring whether or not the Chinese competitor accessed OpenAI’s data without approval.
Why DeepSeek hasn't rattled Apple
“Innovations like DeepSeek’s smaller, more efficient AI models could potentially improve the AI capabilities of Apple’s flagship products, like the iPhone,” says Kate Leaman, chief market analyst at AvaTrade. “Apple has already shown its commitment to AI by integrating ChatGPT into its latest devices, demonstrating its dedication to staying competitive.”
Leaman adds: “Interestingly, Apple’s relatively low AI expenditures compared to other tech giants may have made it more resilient during recent AI-related selloffs.”
Azure casts a cloud over Microsoft earnings
As well as potential DeepSeek disruption, investors were also underwhelmed by growth in Azure, Microsoft’s cloud computing business.
“While this may only be a percentage point miss, expectations for a beat are always high for Microsoft so this has been rather poorly received,” says Ben Barringer, technology analyst at Quilter Cheviot.
Barringer himself isn’t phased by these results, though. While acknowledging that they are “a little disappointing”, he maintains that “there is nothing to panic about with Microsoft. It remains a core, diversified way of playing growth in technology and AI given its strong position and recent valuations.”
The world through Zuckerberg’s glasses
“It seems pretty clear to me that open source will be the most cost-effective, customizable, trustworthy, performant, and easiest-to-use option that is available to developers, and I'm proud that Llama is leading the way on this,” said Meta CEO Mark Zuckerberg in his prepared remarks during yesterday’s earnings call.
It was a significant statement, tackling head on the notion that open sourcing Llama has given a leg-up to Meta’s own competition.
“They're great-looking glasses that let you take photos and videos, listen to music and take calls," said Zuckerberg. "But what makes them really special is the Meta AI integration. With our new updates it'll be able to not only answer your questions throughout the day, but also help you remember things, give you suggestions as you're doing things using realtime multimodal AI, and even translate other languages right in your ear for you.
“I continue to think that glasses are the ideal form factor for AI because you can let your AI see what you see, hear what you hear, and talk to you,” he said.
Meta “continues to push ahead with its Metaverse and its collaboration with Ray-Ban”, says Ben Barringer, technology analyst at Quilter Cheviot. “The stock market has been less than pleased by this in the past, but CEO Mark Zuckerberg remains committed.”
“A self-driving wolf” promise boosts Tesla shares
On Tesla’s post-earnings call, CEO Elon Musk promised investors “an epic 2026 and a ridiculous ‘27 and ‘28”. Hitting back at critics that have accused him of under-delivering on full-self-driving (FSD) promises in the past, he stated “I'm telling you there's a damn wolf this time and you can drive it. In fact, it can drive you. It's a self-driving wolf”.
Markets lapped it up; it was as Musk began this speech that Tesla’s shares began to climb in after-hours trading.
Dan Coatsworth, investment analyst at AJ Bell, was less impressed, focusing on Tesla’s stuttering core business and Musk’s political posturing over the assurances the CEO gave for the future.
“Tesla has now missed earnings expectations in five out of the past six quarters. Under normal circumstances, the chair of a company in this situation would be banging their fists on the table and asking why the chief executive seems to be spending all their time doing something else apart from leading the business,” said Coatsworth.
“Having fallen on the results, the shares have subsequently moved higher in pre-market trading. One explanation is that Musk raised hopes on the analyst conference call… Investors have a habit of buying into his every word,” Coatsworth added.
His view is that Musk’s increasingly active political life is a big distraction from the difficult task of running a business as large as Tesla. “Running a multi-billion- or trillion-dollar company is hard work and requires a laser focus. Investors thinking about buying shares in any business, not just Tesla, need to think hard about this point.”
What do analysts expect from Apple’s earnings?
Here's what analysts are forecasting for Apple’s earnings release this evening.
Analysts polled by FactSet expect quarterly earnings per share (EPS) of $2.35 on revenue of $124.3 billion. Those polled by London Stock Exchange Group (LSEG – formerly Refinitiv) yield the same consensus EPS estimate, but forecast fractionally lower revenue, at $124.1 billion.
“This period not only captures the crucial holiday season but also marks the first full quarter of iPhone 16 sales, bolstered by the rollout of Apple’s new AI features,” he says.
Why Apple needs to show something different to reignite investor enthusiasm
Sam North, markets analyst at eToro, has this to add on Apple’s upcoming earnings release:
“Challenges persist with declining iPhone sales in China, potentially weighing on overall performance. However, innovations in wearables and services could provide offsets.
“Apple has had a negative return over the last 6 months – will that change this earnings season? Maybe, but ultimately it does feel that Apple needs to change something fundamentally to get investors excited again.
“Whether that be a completely revamped new phone, something beyond the incremental updates, a better use of AI or getting back control in China, only time will tell.”
US markets open ahead of Apple earnings
US markets have opened, and after about half an hour, Tesla shares are down 0.5%, Nvidia’s 1.5%, and Microsoft’s nearly 6% as investors continue to digest the implications of yesterday’s earnings releases.
Ahead of earnings, Apple’s shares have opened cautiously, down around 0.2%.
Apple is not immune to Chinese competition
Tesla’s profits have been squeezed by competition from cheaper Chinese competitors like BYD. DeepSeek, as we’ve seen, threatens to undercut massive US tech investments in AI.
Apple, meanwhile, has been grappling with falling iPhone sales in China, the world’s largest smartphone market (bigger, in fact, than the next two combined). It has been forced to cut price tags in order to compete with the likes of Huawei, Xiaomi, Honor, and OPPO, which is a red flag for a company that has historically built its business on premium products at premium prices.
For this reason, expect iPhone sales, particularly in China, to be a key focus of attention in Apple’s earnings call.
Apple: keep an eye on services growth
One of the main things Morningstar analyst William Kerwin will be watching during Apple’s earnings call is services growth. This part of the business includes everything from cloud subscription services to Apple TV+.
“We see this segment as Apple’s second-largest driver behind the iPhone, and we expect it to continue a double-digit growth pace in 2025,” he says.
“The services business is high margin, with a gross return on sales of 74% in Q1 compared to 36% from hardware products,” they write. As such, “ongoing progress here is important, as it supports sales and profits growth and also cash flow”.
Apple: what analysts are expecting
A lot will depend on whether the results beat analysts’ expectations – so let’s remind ourselves what those look like.
The company’s earnings per share are expected to come in at $2.35, according to Factset consensus estimates, up 8% from last year.
EPS beats expectations, but revenue as expected
“Our record revenue and strong operating margins drove EPS to a new all-time record with double-digit growth and allowed us to return over $30 billion to shareholders,” said Kevan Parekh, Apple’s CFO.
How is Apple Intelligence impacting iPhone demand?
An analyst from Morgan Stanley asked Apple executives to comment on how Apple Intelligence – the company’s foray into the AI space – was impacting performance. Chief executive Tim Cook said that the year-on-year performance of iPhone 16 sales was stronger in markets where Apple Intelligence was available.
Apple on DeepSeek
It was only a matter of time before someone asked about DeepSeek – the Chinese AI chatbot that has been launched this month with significantly lower development costs than US equivalents.
That concludes our coverage for this evening. We will be back tomorrow with further insights on Apple, before turning our sights towards the companies reporting next week – Alphabet and Amazon.
Good morning, and welcome back to our live blog covering big tech earnings season.
Apple’s shares fell 0.47% in after-hours trading yesterday, following a mixed bag of results that saw weakening iPhone sales in China.
Reaction and analysis to come – plus, we’ll start looking ahead to Alphabet and Amazon’s earnings releases next week.
More woe for Apple?
Record quarterly revenue isn’t enough to shift attention from Apple’s struggles, according to Josh Gilbert, market analyst at investment platform eToro.
Falling Chinese revenue “will only spark concerns from investors that Apple continues to struggle in China as competition intensifies,” he says. “They have yet to provide shareholders with any sign of a turnaround in a key region, which will continue to be a worry.”
And while CEO Tim Cook attempted to link Apple Intelligence to improved iPhone sales, the effect wasn’t as strong as the market had hoped. “Apple has been behind the curve on AI for a while, with tech competitors ahead in this key race,” said Gilbert.
Positives, though, included Services revenue – “a huge bright spot that investors should watch” in Gilbert’s view – as well as a strong revenue forecast for the second quarter, of low-mid single digit growth.
However, “Tim Cook and his team need a big 2025, driving iPhone sales again and doing what they can to stem the bleeding in China”, says Gilbert.
The shiny side of Apple’s earnings
“Apple’s quarterly results reflect its ability to remain a leader in the tech sector despite challenges in some of its business units,” he says. Services growth in particular supports this, and offsets the struggles of Apple’s iPhone and wearables division.
“Despite supply chain challenges, Apple has managed to sustain demand for its computing devices,” says Di Giacomo – Mac sales came in at a shade under $9 billion, exceeding expectations.
Apple “continues to focus on diversification and innovation, allowing it to face competition and maintain its privileged position in the industry”, says Di Giacomo.
IBM’s earnings send shares flying
We’ve had other big tech earnings this week besides Apple, Tesla, Meta and Microsoft.
Increasing AI demand saw IBM’s software division increase 10% year-on-year. “Clients globally continue to turn to IBM to transform with AI,” said CEO Arvind Krishna.
Intel’s earnings
Despite underwhelming forward guidance, Intel’s shares gained 3.7% in after hours trading.
“Intel has been behind the curve on the AI theme,” says Russ Mould, investment director at AJ Bell. “That’s left it at the mercy of soft demand for chips used in personal computers and smartphones.
“The controversial exit of CEO Pat Gelsinger at the end of last year provided the opportunity for a reset. To get the market back onside the company will have to deliver consistently improved performance and show that it can react to the changing dynamics in its industry.”
Dissecting DeepSeek: is US tech in trouble?
“This disruption comes at a time when U.S. exceptionalism – particularly in tech – has been driving the bull market,” says Daniela Sabin Hathorn, senior market analyst at Capital.com. “The heavy reliance on the Magnificent Seven means that any loss of confidence in these companies poses a real risk to the broader market.”
DeepSeek, a Chinese generative AI start-up, has sparked a stock market selloff by outperforming ChatGPT at a fraction of the training and compute costs
Markets are often over-cautious – they “shoot first and ask questions later”, as Sabin Hathorn puts it. “Despite this week’s dramatic drop, big U.S. tech stocks still maintain significant competitive advantages that will make them difficult to disrupt overnight,” she says, but all the same, DeepSeek has prompted a re-evaluation of the stocks’ valuations.
These have looked stretched for some time, but as long as AI revenues and profits were ballooning unchecked, the markets kept buying. Now, however, “investors may begin to reevaluate whether these companies have become too expensive, especially if their ability to generate strong AI-driven returns is now in question due to a lower-cost competitor entering the scene”.
Huang meeting Trump today; will Chinese exports be discussed?
Huang missed Donald Trump’s inauguration as he was travelling to celebrate Chinese lunar new year.
The two will likely discuss trade policy in light of DeepSeek’s unsettling of the stock market – a development which has seen Nvidia’s shares open today 13.2% below their close last Friday.
We should know more about Trump’s tariff plans one way or another over the weekend; tomorrow marks Trump’s self-imposed deadline for the first round of tariffs against China, Canada and Mexico.
Thanks for following big tech earnings with us this week. That's all for the time being, but we'll be back on Monday, gearing up for Alphabet and Amazon's earnings and bringing you the market's reaction to all the tech news in the meantime.
Good morning, and welcome back to our live blog covering tech earnings. This week, results are in from Amazon and Google’s parent company Alphabet.
He has also threatened that similar tariffs on EU imports are on the way, though has said a deal “can be worked out” with the UK.
“What was considered to be bluff and bluster from Trump has turned into cold hard reality,” says Susannah Streeter, head of money and markets, Hargreaves Lansdown. “Investors are rattled at the prospects of a full-blown trade war breaking out after the US slapped punishing tariffs on Canada, Mexico and China, prompting retaliation… “European indices are also set for a rocky day of trading and Wall Street is set to open firmly in the red.”
What do tariffs mean for AI and big tech?
We’ve started a separate blog to cover the unfolding tariffs story – please follow there for detailed updates on what Trump’s tariffs mean for your money.
Firstly, as tariffs are expected to push US inflation back above 3%, “the window for further interest rate cuts by the Fed may have just closed”, according to Neil Shearing, group chief economist at Capital Economics. That creates an immediate headwind as far as big tech stocks are concerned.
Shearing also thinks that the twin shock of tariffs and DeepSeek’s emergence onto the scene raises the prospect of further controls over tech exports.
China “remains dependent on technology developed by either the US or the US’s traditional allies”, says Shearing. “It is unclear what the approach of the new Trump administration towards technology controls will be, but if they can be tightened and enforced they could be a more effective way of pushing back against China than tariffs.”
Which big tech companies are announcing earnings this week? We’ve outlined a timeline of the highlights below:
Company | Date | Time |
|---|---|---|
Palantir (NASDAQ:PLTR) | 3 February | After markets close (AMC, i.e. 9pm UK) |
Alphabet (NASDAQ:GOOGL) | 4 February | AMC |
Advanced Micro Devices (NASDAQ:AMD) | 4 February | AMC |
Qualcomm (NASDAQ:QCOM) | 5 February | AMC |
Arm Holdings (NASDAQ:ARM) | 5 February | AMC |
Uber Technologies (NYSE:UBER) | 5 February | Before markets open (i.e. before 2.30pm UK) |
Amazon (NASDAQ:AMZN) | 6 February | AMC |
Source: https://www.nasdaq.com/market-activity/earnings
Palantir’s announcement today could be worth watching given the proximity of founder Peter Thiel to the Trump administration. Analysts polled by London Stock Exchange Group (formerly Refinitiv) expect quarterly earnings to increase 37.5% year-on-year to $0.11, with revenues expected to increase 27.5% to $775.9 million.
Will big tech earnings converge with the wider stock market?
The Magnificent Seven’s collective earnings growth is expected to slow to 21% in 2025, down from 33% in 2025.
“This would mark a narrowing of the gap with the rest of the S&P 500, where the remaining 493 companies are forecast to see earnings growth rebound to 13%, a sharp recovery from the meagre 4% recorded last year,” says Tom Bailey, head of research at HANetf.
“Whether the Mag7 can continue to position themselves as market leaders in the era of AI disruption remains to be seen,” Bailey adds. “As a result, many investors, concerned about this concentration risk, are looking for ways to diversify.”
Sky high AI expectations for Palantir’s earnings
Big data and AI platform Palantir is the headline figure among today’s tech earnings releases.
“A spotlight will be on Palantir's AI platform, with investors eager to see how it’s driving enterprise adoption and converting pilot programs into full-scale deals,” says Britzman. “While its growth potential is exciting, the key question is whether it can deliver earnings fast enough to justify its steep valuation - around 150 times next year’s expected earnings.
“This sets high stakes for next week’s fourth quarter results, where nothing shy of perfect execution will be tolerated.”
Tech stocks fall as US markets open
As expected, US stocks have opened down this morning as markets digest the weekend’s news.
Both Nvidia and Tesla’s shares fell have fallen substantially – Nvidia’s shares are down around 5% and Tesla’s around 6% in the first 25 minutes of trading.
Meta is the only Magnificent Seven stock making a positive start to today’s session, up around 0.4%.
Tech shares rebound as Mexico agreement calms markets
Nvidia has regained much of its lost ground from earlier this afternoon, and is down around 2% today. Tesla shares are still down over 4%, though. Doug Ford, Premier of Ontario, appeared to take aim directly at CEO Elon Musk when he tweeted that he would “be ripping up the province’s contract with Starlink. Ontario won’t do business with people hell-bent on destroying our economy”.
Thanks for joining our coverage of big tech earnings today. We're signing off for this evening, but we'll be back tomorrow morning with Palantir's results, reaction, and previews of Alphabet's crucial earnings release tomorrow evening.
Palantir shares soar after earnings beat
The big news overnight is that Palantir’s results smashed expectations. Earnings per share of $0.14 were well ahead of the $0.11 that analysts polled by London Stock Exchange Group had anticipated, and marked a 75% year-on-year increase.
We’ll bring you more analysis on these results, as well as a look-ahead to tonight’s main event: Alphabet’s earnings release.
Forward guidance key to Palantir’s surge
When dealing with a growth stock like Palantir, markets will tend to look at least as much towards the forward guidance – what’s coming up – as they will to the results themselves, which are inherently retrospective.
“Palantir issued a FY 2025 revenue guidance of 31% year-over-year growth, which was well above consensus estimates,” says Sam North, market analyst at eToro. “When executives say the growth is unlike something they have ever seen before, you know things must be good.
“The stock is now up over 500% in the last 12 months, so some caution should be shown here, but sometimes you do just have to say ‘fair play’ to a company who is getting everything right at the moment.”
Palantir ride “could get bumpy”
“Palantir is the Michael Jordan of AI stocks right now, not only capturing investors’ imagination but delivering game-winning shots when it counts,” says Matt Britzman, senior equity analyst, Hargreaves Lansdown.
Individual investors have long backed Palantir’s stock, but this has driven its valuation into fairly zany territory. Even before the after-hours share price surge, Palantir was trading at over 400 times trailing earnings – the after-hours trade implies that this multiple will today increase to over 500.
“The company’s massive retail investor fanbase is playing three moves ahead, but with its sky-high valuation, this ride could get bumpy,” says Britzman. “AI’s growing relevance keeps Palantir in the spotlight, but investors should buckle up for volatility.”
Keith Bowman, equity analyst at Interactive Investor, observes that “A 392% gain in the share price over the last year currently leaves Wall Street consensus opinion pointing towards a ‘hold’”.
Countdown to Alphabet’s earnings begins
However, “analysts are optimistic about Alphabet’s performance, with expectations of continued growth driven by strong demand for AI and cloud services,” says Sam North, market analyst at eToro. “Overall, the sentiment is okay and the fact that it has lagged behind the top Magnificent 7 stocks does suggest to me there is room for growth, and maybe a good earnings report will kick it into life.”
Alphabet earnings: what to expect
Sundar Pichai, CEO Alphabet and Google, could face questions on DeepSeek and AI disruption in this evening's earnings call.
FactSet’s estimates, if correct, would represent year-on-year growth of 12% in revenue and 29% in earnings for Google and Alphabet’s wider business.
As last week, keep an eye out for management’s comments on DeepSeek and the potential impact the Chinese AI firm could have on Google, particularly its own generative AI model, Gemini.
Alphabet shares open strongly ahead of earnings
The Nasdaq 100, home of most of America’s big tech stocks, is up roughly 0.3%.
Ad spend could be an earnings positive for Google
According to Jefferies, momentum shifted away from Meta’s platforms and towards Google and YouTube during the quarter. Ad spend on these platforms was up 20-22% year-on-year during October and November, though growth slowed in December due to stronger competition and unexpectedly low holiday spend.
Ad spend on Youtube and Google, as well as Google Cloud Platform growth, could be key in Alphabet's earnings.
“In our view, the core search business is still attracting incremental ad dollars in the shift to digital and mobile,” said Jefferies analysts Brent Thill, John Byun and Maximilian Joseph in a research note seen by MoneyWeek.
The analysts predict that Google Cloud Platform will grow “incrementally from a much smaller base” than competitors Microsoft Azure and Amazon’s AWS, “by leveraging its strength in data analytics and aggressive pro service incentives”.
We're about four hours away from Alphabet's earnings release. GOOGL shares have fallen back a little over the last two hours: having been up as much as 2.7% earlier, they're now about 1.6% up today.
Will Alphabet double down on AI investments?
Just under an hour to go until US markets close. We’ll know Google’s results soon after then – the earnings call is scheduled for 1.30pm PT (9.30pm UK). We’ll bring you the highlights after earnings are released. In the meantime, Alphabet shares have gained around 2% so far today.
"Alphabet and Amazon will release earnings this week and will ultimately face questions on the DeepSeek developments,” says White. “They are likely to join Meta chief executive Mark Zuckerberg in the defence of the investment in AI at its upbeat earnings statement last week.”
Zuckerberg went as far as to promise “hundreds of billions more” on AI spend. Will Alphabet’s management be so bold, with DeepSeek threatening to undercut big tech’s huge investments?
GOOGL shares are finishing the session strong, around 2.6% up today. Will results back up the Alphabet share surge?
BREAKING: Alphabet beats on earnings
Investors don't seem to like Alphabet's earnings so far. GOOGL shares have fallen 6.7% in after-hours trading.
Alphabet revenue streams growth
Here’s a quick summary of Alphabet’s revenue streams, with year-on-year changes:
Sundar Pichai addresses investors in earnings call
“First, AI infrastructure: our sophisticated global network… provides a powerful foundation for us and our customers.
“We have a unique advantage, because we develop every level of our technology stack.”
That Google Cloud figure is in fact a little below estimates, and that seems to be what's sent shares down. Morningstar had expected cloud revenue to "top $12 billion", when it actually came in slightly under.
"Alphabet's latest earnings offered a mixed bag with stronger-than-expected ad revenue but it’s a cloud miss that’s sent shares sliding," says Matt Britzman, senior equity analyst, Hargreaves Lansdown.
"While the cloud shortfall made the headlines, don’t overlook the fact that search is still Alphabet’s crown jewel. The real pivot point ahead will be how effectively they integrate AI into search, a topic that will likely dominate the upcoming analyst call," he adds.
Capex: bad news for Google, good news for Nvidia?
"The capex guide is another hot topic that has likely unnerved some investors, with Alphabet expected to ramp up investment to the tune of $75 billion over the coming year," says Matt Britzman, senior equity analyst, Hargreaves Lansdown. "This move isn’t entirely surprising - other cloud giants are following suit, despite the recent DeepSeek-driven narrative suggesting AI models could be cheaper to build than anticipated.
Alphabet shares are now down over 7% in after-hours trading.
"Free tier and subscriptions" the immediate focus for Gemini
On monetisation, “for now we’re focused on a free tier and subscriptions”. While there are ideas in the pipeline for ads, for the foreseeable future the focus is on user experience and increasing adoption.
Alphabet's earnings call is now over. GOOGL shares are down around 8% in after-hours trading, with investors clearly worried over that cloud revenue miss.
Why cheaper AI isn't necessarily bad news for Alphabet, Amazon or Nvidia
“There’s certainly some nervousness around where compute is heading and what pace the cost is being driven down,” says Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“There’s an argument that even if the cost of compute comes down rapidly, it just means more companies will have access and the ability to create AI products,” he tells MoneyWeek. “The overall aggregate demand for Nvidia’s product can actually still grow in that environment – in economics it’s known as the Jevons Paradox.”
While Britzman refers specifically to Nvidia, the same principle could apply to infrastructure providers like the big three cloud companies – Microsoft, Alphabet and Amazon.
AMD shares plummet despite earnings beat
Other big tech earnings news overnight: semiconductor company Advanced Micro Devices (NASDAQ:AMD) beat on earnings, but missed on data centre revenue. Not a dissimilar story to Alphabet in that regard, and like Alphabet, AMD’s share price tumbled in after-hours earnings – ending 8.8% down on their regular trading close price.
When are the next Magnificent Seven results?
That’s then it for a little while as far as the Magnificent Seven are concerned. Nvidia (NASDAQ:NVDA) earnings are scheduled for 26 February.
However, there’s plenty more coming in big tech earnings. Uber (NYSE:UBER) announces results this afternoon (before US markets open), and we’ve then got a couple of heavy-hitters coming up this evening, with semiconductor giants Qualcomm (NASDAQ:QCOM) and Cambridge-based Arm Holdings (NASDAQ:ARM) announcing results after markets close.
Uber announces earnings
Uber’s results are in, and it’s a huge earnings beat for the ride-hailing giant. Adjusted earnings per share of $3.21 smashes through analyst estimates of $0.50.
However, shares have slumped in pre-market trading – down 6.5% as things stand.
One area of concern for investors appears to be the implications of robotaxis for Uber. CEO Dara Khosrowshahi acknowledged as much, saying “Naturally, investors are debating whether [autonomous vehicles] pose a risk or present a massive opportunity for Uber.”
Amazon results: earnings and revenue expectations
Let’s start looking ahead to Amazon’s earnings announcement tomorrow evening.
Amazon earnings: what’s expected from AWS?
Amazon Web Services (AWS) is likely to be the division that gets the most attention when Amazon announces results tomorrow evening. The world’s leading cloud provider, AWS ought to be picking up on AI tailwinds as big tech companies the world over boost their compute capacity.
Analysts expect AWS revenue to increase by around a fifth year-over-year
Jefferies analysts are a little above Wall Street consensus in predicting AWS revenue to increase 20% year-on-year. That implies $29.04 billion from the cloud division during Q4.
US stocks dip; Amazon shares down
Amazon shares are worse off, trading 2.4% down on yesterday’s close so far. With Microsoft and Alphabet having both missed on cloud revenue so far this earnings season, investors seem to be positioning themselves for bad news tomorrow.
Thanks for following the latest in tech earnings news with us today. We're going to leave the live blog here for this evening, but we'll be back tomorrow morning with the low-down on Qualcomm and Arm's results, plus more build-up ahead of Amazon's earnings.
Semiconductor stocks and Amazon earnings previews
A big day ahead, as Amazon’s earnings make it six of the Magnificent Seven to have reported so far this year.
We’ll bring you more analysis and previews ahead of Amazon’s results throughout the day, but first, we’ll look into why semiconductor stocks Arm and Qualcomm have both fallen in after-hours trading.
Why has ARM fallen?
Sales guidance for the current quarter was also in line with analyst estimates, so it’s not clear what exactly caused the selloff. It could simply be that, with the stock up 125% over the past 12 months, investors are banking some profit after a good, but not spectacular, set of results, especially given the degree of uncertainty currently surrounding tech valuations.
Why has Qualcomm fallen?
Qualcomm’s shares did initially gain in after-hours trading but ended the session well down.
The only real negative in the earnings release was a narrow miss on licensing revenue. This is a high-margin segment, so it’s possible that investors paid it extra attention. Qualcomm’s smartphone segment could also suffer in the long term due to weakening demand for Apple iPhones.
Stargate and Amazon’s capital spend
Dan Romanoff, equity research analyst at Morningstar, writes that data centre capacity expansion is likely to make this an interesting watch-out in Amazon’s results.
Amazon’s capex is “made more interesting by the Stargate announcement” that Trump issued in his first week back in the White House, according to Romanoff. That’s putting $500 billion of US government funding to work to boost the country’s AI infrastructure.
However, Bank of America analysts think that it could potentially compete with AWS for AI workloads – with Oracle (NYSE:ORCL) the major infrastructure firm included in the joint venture’s initial announcement.
Cloud and capex will be key to Amazon’s earnings
As Amazon’s earnings release approaches, let’s recap on what to look out for in this evening’s release.
“MSFT and Google both missed expectations on cloud sales in the quarter. With Amazon being the world’s largest cloud provider, there is likely to be extra focus on their cloud computing division, AWS,” Arjun Wariabharaj, investment analyst at EQ Investors, tells MoneyWeek.
On capex, Wariabharaj says that “the large tech companies have been dedicating significant amounts of capital for Research & Development (R&D) towards Artificial Intelligence.
“The timely release of DeepSeek has sent shockwaves through the market and brought into question the relevance of such heavy investment or the need for the latest chips.”
Christmas shopping another look-out in Amazon’s earnings
While much of the focus will be on Amazon’s cloud revenue via AWS, its core e-commerce business is likely to drive the majority of revenue and could be in for a good quarter, according to Jefferies analysts Brent Thill, John Colantuoni, John Byun and Rayyana Matraji.
The analysts wrote in a research note seen by MoneyWeek that “e-commerce looks positive, given solid holiday sales data". They added that “consumers remain resilient in spend, while still looking for value”.
Let's pause on Amazon for a moment and look at semiconductor company Arm
The important context behind Arm’s share price decline is the increased capex projections from AI firms.
“Arm’s share price fall after beating Q3 expectations is entirely understandable, and likely reflects a market reacting to disappointing guidance relative to the higher-than-expected capex plans from Meta and Alphabet. With hyperscalers signalling significant datacentre infrastructure spending, investors were potentially looking for Arm to significantly raise guidance for FY25.
“The fact that Arm’s guidance came in only ‘in line’ with prior consensus, despite significant investment plans from hyperscalers, suggests to the market that Arm’s immediate benefit from this datacentre boom is not as strong as hoped. This isn’t necessarily about Arm’s Q3 performance itself, which was strong. It is about the forward outlook and whether Arm is capitalising on the AI capex wave to the extent the market had begun to expect.
Arm and Amazon are connected
Further to our last post, the disconnect between hyperscaler capex guidance and semiconductor firms’ revenue outlook creates an interesting dynamic for Amazon.
“The tech investor mood is likely one of disappointment and re-evaluation. The hyperscaler capex news initially fuelled bullishness for the data centre infrastructure ecosystem,” said James Ford, senior analyst at Charles Stanley.
“Now, the market is questioning whether Arm’s near-term growth trajectory will be as strong as previously anticipated, and perhaps re-assessing the immediacy of the AI benefit for Arm’s financials.”
There are clues for Amazon’s earnings in Arm’s results given that it is a supplier of custom processors to AWS Graviton, a segment that has performed strongly.
“We are gaining share in the data centre with AWS Graviton, Microsoft Cobalt, Google Axion, and NVIDIA's Grace Arm-based chips,” said Arm’s CEO Rene Haas during yesterday’s earnings call. “AWS recently announced more than 50% of new CPU capacity installed over the past two years was on Graviton. Over 90% of AWS's top 1,000 EC2 customers use Graviton.”
However, the potential implications of Graviton’s growth for Amazon are nuanced.
“While Arm’s Graviton success is a positive signal for AWS’s general-purpose compute business, it is vital to remember that Graviton CPUs are not Amazon’s primary AI accelerators,” says Ford. “Amazon’s AI datacentre strength and investments are more directly tied to their Inferentia and Trainium chips, designed specifically for AI/ML workloads.”
Amazon beats earnings: EPS 25% higher than analysts' expectations
Amazon’s results are out, and the company has beaten analysts’ expectations. It announced earnings per share (EPS) of $1.86, up from $1.00 a year ago. That is an annual increase of 86%.
The company also announced revenues of $187.8 billion in the fourth quarter, up 10% compared to a year ago. This was slightly higher than analysts’ expectations of $187.4 billion.
Amazon reports highest capital expenditure ever
Amazon revealed that its capital expenditure in the fourth quarter was $27.83 billion, up from $14.59 billion a year ago – an increase of more than 90%. The Wall Street Journal reports that this is Amazon's highest capex figure ever.
Thank you for joining us, that concludes our coverage for this evening. We will be back tomorrow with further analysis on Amazon and all things Big Tech.
Good morning, and welcome back to our tech earnings blog. We are returning with further analysis on Amazon this morning.
Let's take a closer look at Amazon Web Services. This is the company's cloud computing platform – and a part of the business it is investing heavily in.
"It's important not just because it’s the foundation backing up the mammoth investment plans, but also because Microsoft and Alphabet are hot on their heels, trying to steal their cloud crown."
A huge amount of money is being spent on AI – but will it bear fruit?
He explains: "Amazon and rivals Microsoft and Google are spending big right now, but it’s clear they need to.
"Investors are concerned with the results from these hyperscalers because cloud growth isn’t meeting expectations. However, demand is outstripping supply, so spending is necessary to meet growing AI demand.
"We’re still early in this AI boom, so I don’t think investors should be too concerned when demand is this high and set to stay high throughout the year."
Overall, Amazon remains "in great shape"
He says: “Goods are being delivered faster than ever before and Amazon continues to be the first shop that comes to mind for millions of people when they want to buy a specific product.
“Fundamentally, Amazon remains in great shape. It has never been afraid to try new things – if they work, great; if they don’t, it moves on. Some experiments have been slightly off the mark, some were actual clangers, but it learns from each one.
That concludes our coverage for today. Thank you for joining us! There is now just one Mag7 company left to report – and it's the big one. All eyes will be on Nvidia on 26 February.