Big tech earnings: Amazon beats expectations but share price falls

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.

Stay tuned!

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.

Nvidia will complete this round of Magnificent Seven earnings, but not until 26 February.

Tech earnings: what's happened so far

The latest round of big tech and artificial intelligence earnings opened a couple of weeks back, as Nvidia supplier Taiwan Semiconductor (NYSE:TSM) announced an earnings and revenue beat. Shares gained 3.9% in the session following the announcement.

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.

Earlier today, SAP (NYSE:SAP) announced its results for the latest quarter. Shares opened 2% down as the company missed analyst earnings per share (EPS) estimates.

DeepSeek rocks the stock market

Despite positive results from Netflix and TSM, a cloud has settled over the US big tech stocks ahead of earnings this week.

The reason: Chinese AI start-up DeepSeek appears to be capable of building sophisticated AI platforms without relying on the kind of high-performance GPUs whose export to China has been banned by successive US governments.

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?

Renowned investor Ray Dalio, founder of hedge fund Bridgewater Associates, has stated that in his view the current AI boom is reminiscent of the dot-com bubble that ballooned then burst in the late 1990s.

“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”.

Where that leaves investors who have put money into US big tech on the assumption that AI would drive outsize future profits is unclear.

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.

Despite this, experts have pointed out that there is little overlap between what Tesla does and how DeepSeek operates.

“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.

Nvidia's shares, having fallen 17% on Monday, gained 8.9% yesterday. The Nasdaq 100 gained 1.6%, having fallen 3% on Monday.

Keep following the blog today for more reaction, as well as previews of the big tech earnings releases.

DeepSeek highlights why diversification is key

Various experts are pointing out that the recent pullback in tech stocks underscores the need for a diversified portfolio.

“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.

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

Another stalwart of the big tech scene and a key player in the AI rally, Microsoft (NASDAQ:MSFT) also announces earnings this evening.

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.

These estimates imply a 52.6% year-on-year increase in full-year earnings.

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.

Schroders experts Paddy Flood, portfolio manager and global sector specialist, and Simon Webber, head of global equities, feel that Meta, like Microsoft, could be one of the hyperscalers set to benefit in the long term should the capex requirements of scaling AI products fall in future.

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.

Expect plenty of focus on this in the webcast following the earnings release.

ASML: Strong results offer relief amid DeepSeek sell-off

European semiconductor company ASML (NASDAQ:ASML) published its fourth-quarter results today. The share price bounced at market open on news of stronger-than-expected sales.

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?

As a reminder, Meta, Microsoft and Tesla all announce earnings today, after US markets close.

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

While Meta is clearly playing a long time when it comes to its AI positioning, investors will undoubtedly be scrutinising its costs in the short run.

“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

A quick recap on the consensus estimates among analysts polled by FactSet for the Magnificent Seven companies announcing their results this evening:

_{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?

In the wake of the DeepSeek news, there is a real chance that disappointing earnings from any of the Magnificent Seven over the coming days could have a big, negative impact on their share price.

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”.

These risks prompted the S&P 500 to fall 1.5% on Monday, thanks to its over-concentration in US tech megacaps.

Given its size, most investors worldwide will have significant exposure to the index in their portfolios, but UK investors might be particularly heavily exposed to the Magnificent Seven.

“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.

In terms of ways to protect portfolios against this over-exposure, particularly in the event of a selloff, Khalaf highlights the use of active funds to avoid index over-concentration, choosing funds that offer US exposure without including the Magnificent Seven such as Artemis US Smaller Companies, or choosing an equal-weighted tracker fund such as the iShares S&P 500 Equal Weight ETF (LON:ISPE).

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.

Fed meeting to set interest rates

Big tech stocks could be influenced by other factors besides Tesla et al.'s earnings releases today.

The Federal Reserve's (Fed) Open Market Committee (FOMC) is meeting today to set interest rates.

President Donald Trump has called for rates to be cut, but given the inflationary risks that some of his policies carry, that seems unlikely. Fed funds futures prices indicate a 99.5% probability that the Fed will leave rates unchanged.

To follow the FOMC meeting in more detail, see our US sister site Kiplinger's live blog.

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.

Having rebounded from the DeepSeek shock yesterday, US megacaps are on the back foot again. All of the Magnificent Seven are down; Nvidia shares have fallen over 6%, and the Nasdaq 100 is down approximately 0.8%.

Markets appear to be cautious with the Fed expected to pause its rate cutting cycle. Could strong earnings from big tech brighten the mood?

Fed keeps rates unchanged

The S&P 500 and Nasdaq 100 have fallen further as the Federal Reserve (Fed) keeps its headline rate between 4.25% and 4.50%.

Ahead of earnings, Tesla shares are 2.9% down. Microsoft has fallen 1.1% today, though Meta shares are trading relatively flat.

Nvidia is down 6.1%.

Microsoft Results

And the results are in...

Microsoft announces earnings per share of $3.23, up 10% year-on-year. That's ahead of FactSet analyst estimates of $3.11.

Revenue increased 12% to $69.6 billion, beating analyst estimates of $68.9 billion.

Tesla misses earnings estimates

Tesla's earnings per share come in at $0.73, missing the $0.77 FactSet analysts had forecast.

Revenue of $25.71 billion also missed expectations of $27.22 billion.

Tesla shares fall in after-hours trading following earnings miss

That earnings miss has seen Tesla shares fall over 3% in after-hours trading.

Microsoft shares are also down a similar amount, despite its earnings beat.

Still waiting on Meta's results.

Meta beats earnings expectations

Meta's results are in: a big earnings beat, with quarterly EPS of $8.02 compared to FactSet analysts' expected $6.76.

Revenue of $48.39 billion also beat analysts' expected $46.99 billion.

Tesla shares rebound

Despite slumping in early after-hours trading, Tesla shares have since rebounded and are now up 3.5% after-hours.

Meta's shares are down about 3.8%, while Microsoft's are down slightly over 1%, after both beat estimates.

We did say earnings beats and misses wouldn't necessarily dictate post-earnings moves...

Outlook key for Tesla shares?

Despite the earnings miss, there are some positive signs in Tesla's outlook that could explain its counter-intuitive after-hours bounce.

New models, including more affordable lines, are "on track" to start production in the first half of 2025.

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."

Autonomy and affordability are the watchwords for Tesla if it is to live up to the expectations many have, and if it remains on course to crack them, investors won't mind one quarterly miss in the long run.

Meta shares turn positive during earnings call

Meta's share price has swung upwards, as CEO Mark Zuckerberg has outlined his optimism for 2025 - a year that he says will see a new relationship between the business and the US government, as well as a defining era for Llama and open-source.

Meta shares now 4.7% up after hours, following an initial dip.

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.

Thank you for following the blog today. Join us tomorrow morning as we dissect the details from tonight's earnings announcements and analyst calls in detail, process the market reaction, and of course turn our attention towards Apple's earnings release in the evening.

Good morning, and welcome back to our coverage of big tech earnings season.

We'll spend today digesting yesterday's earnings reports, exploring why Tesla's shares rose in after-hours trading despite its earnings miss, and looking into why Microsoft shares fell despite beating expectations.

Plus, today's main event: Apple's earnings release, due this evening, as Magnificent Seven earnings continue.

Recap: Tesla gains on future hopes, Microsoft could be in deep trouble

We already knew that Tesla's results were likely to be underwhelming, following a fall in deliveries that had been announced earlier in January.

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.’’

Microsoft, however, posted solid earnings, but fell 4.6% after-hours. Investors seem concerned that the company is particularly susceptible to disruption from Chinese AI startup (or upstart?) DeepSeek.

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

Unlike its Magnificent Seven colleagues, Apple's share price has increased in every session so far this week, seeing it regain its crown as the world's largest company by market cap.

While rivals for the title Nvidia and Microsoft saw their stock plummet as DeepSeek's arrival on the scene threatened to displace their places at the forefront of the AI ecosystem, the implications of the Chinese company's advances in cheap, relatively low-compute generative AI could be a tailwind for Apple (NASDAQ:AAPL).

“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.

Microsoft had previously guided for 31-32% year-on-year growth in the division, and the results came in at the very bottom of that range.

“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.

Zuckerberg is clearly seeing things through a different lens, though, focused as he is on how his company can use AI to shape its eponymous Metaverse.

To that end, he also elaborated on progress made on Ray-Ban Meta glasses.

“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.”

Other analysts, however, do believe that autonomy and the FSD opportunity is the golden egg as far as Tesla is concerned. "We believe the autonomous/AI piece is 90% of the Tesla story today and thus speaks to our $2 trillion valuation thesis for Tesla over the coming 12 to 18 months," wrote Wedbush Securities analyst Dan Ives.

When does Apple announce earnings?

The next Magnificent Seven stock to announce earnings is Apple, which will report today after markets close (9pm UK time). The release will be followed by an earnings call, which will begin at 2pm on the Pacific coast (so, 10pm UK time).

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.

These numbers imply year-on-year revenue growth of 3.8% and earnings growth of 2.35%.

Besides the headline figures, Matt Britzman, senior equity analyst, Hargreaves Lansdown, suggests that iPhone sales in particular will be watched closely by markets.

“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

The theme that is developing across all of the Magnificent Seven is one of cheaper competition from China. In fact, big tech earnings reports are a key battleground in the contest for technical and business dominance that is rumbling between the two countries.

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.

iPhone shipments: the battle for market share

The International Data Corporation (IDC) publishes a quarterly mobile phone tracker. The latest edition shows that global smartphone shipments increased by 2.4% year on year in the final quarter of 2024.

Despite this, Apple saw a decline with its shipments down 4.1% over the same period. The iPhone giant still holds the top spot on the leaderboard, but Chinese competitors like Xiaomi are fighting hard to take market share.

This is also impacting South Korean giant Samsung, which occupies second place on the leaderboard. Samsung also saw a decline in smartphone shipments in the final quarter of 2024, albeit to a lesser extent at -2.7%.

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.

This sentiment is echoed by analysts at investment platform AJ Bell.

“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

Once Apple's results are released after market close today, which way will the share price go in after-hours trading?

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.

Meanwhile, sales are expected to come in at $124.3 billion, up 4% from last year.

Apple closes 0.74% lower before earnings

There's less than an hour to go until Apple releases its earnings, and the market has now closed. Shares in the company fell 0.74% during trading hours today.

EPS beats expectations, but revenue as expected

Apple announced earnings per share of $2.40, up 10% year on year. This beat consensus estimates of $2.35.

Revenue was broadly as expected coming in at $124.3 billion, up 4% year on year.

“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.

iPhone sales fall

Although revenues were broadly in line with expectations, iPhone sales fell by around 1% year on year. Overall sales in China also fell by around 11%.

The share price has responded negatively in after-hours trading so far, and is down more than 1% at the time of writing.

Apple's services business: revenues up 14%

Apple's services business continues to see double-digit growth, with revenues hitting a record high of $26.3 billion.

"Services continues to see strong momentum," the company said.

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.

Naturally, an analyst on the call wanted to hear Cook's views.

"Innovation that drives efficiency is a good thing," Cook said, adding that Apple has always taken "a very prudent approach" when it comes to capital expenditure.

Apple share price bounces back during earnings call

After falling initially, Apple's share price has bounced back over the past forty-five minutes or so as investors digest the results.

At the time of writing, shares are up more than 3% in after-hours trading as investors reflect on a positive earnings call overall.

iPad and Mac sales both saw double-digit growth of more than 15%. Services was another bright spot, up 14%. These more than counteracted the slight drop in sales of iPhones and wearables.

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.

Thank you for joining us.

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

Antonio Di Giacomo, senior market analyst at XS.com, is more focused on the positives for Apple, though.

“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.

On Wednesday, IBM (NYSE:IBM) announced earnings per share (EPS) of $3.92 on revenue of $17.6 billion, a strong beat on the $3.75 EPS that analysts polled by London Stock Exchange Group had forecast.

IBM shares gained 13% yesterday, the best day for IBM stock since 20 July 2000.

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

Elsewhere, chipmaker Intel (NASDAQ:INTC) posted earnings of $0.13 per share, fractionally above the $0.12 that analysts polled by London Stock Exchange Group had forecast. Revenue also came in slightly above estimates, at $14.3 billion compared to an expected $13.8 billion.

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?

To what extent does DeepSeek represent an existential threat to the incumbent US big tech megacaps?

These companies, the Magnificent Seven in particular, have dominated the stock market over the last two years, but the emergence of a low-cost AI competitor has given investors pause for thought.

“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.”

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?

The FT reports that Nvidia CEO Jensen Huang is today meeting US president Donald Trump for the first time since the latter re-entered the White House. According to insiders cited in the report, the meeting had been arranged before news about Chinese AI start-up DeepSeek broke last weekend.

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.

Trump may well push for greater export controls on critical AI infrastructure to China. Nvidia, however, has historically resisted such moves, arguing that they will only accelerate the rate of innovation in the field within the country.

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.

Over the weekend, president Donald Trump made good on his inauguration day promises to enact steep tariffs on US rivals and trade partners. Trump imposed tariffs of 25% on imports from Mexico and Canada, and increased those on Chinese imports by 10%. The new tariffs will take effect tomorrow.

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.

European stocks have both slumped in response; the DAX is down 1.6% this morning and the FTSE 100 fell 1.3%. S&P 500 futures are down 1.5%.

“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.

For AI, big tech and Magnificent Seven investors, though, there are some specific implications.

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:

_{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 reason the stock market has become saturated with the Magnificent Seven stocks over recent years is that they have, collectively, accounted for almost all of its earnings growth.

However, that trend is set to shift this year, according to predictions from FactSet analysts.

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.

Matt Britzman, senior equity analyst, Hargreaves Lansdown, predicts that investors will be focused on growth of its AI platform as well as the pace of its earnings growth.

“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.

The S&P 500 is 1.6% down, while the tech-heavy Nasdaq 100 has fallen around 2%.

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

Trump has reached an agreement with Mexico to pause imposition of tariffs on the country for a month.

Markets have breathed a small sigh of relief; the S&P 500 is now just 0.6% down today, while the Nasdaq 100 is down a little below 0.7%.

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

Welcome back to our big tech earnings live blog.

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.

Palantir shares gained almost 25% in after-hours trading.

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.

So whilst there was much to like about what Palantir has done (revenue increased 36% year-on-year to complement the earnings beat), it was the future outlook that really excited the market.

“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

Alphabet, the parent company of search engine giant Google, announces earnings this evening after US markets close (i.e., after 9pm UK).

Alphabet has been a middling performer among the Magnificent Seven in the six months to 3 February, with its gains of 23.3% during that time trailing the likes of Meta (45.3%), Amazon (46.3%) and Tesla (90.6%) by some distance.

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

Analysts polled by FactSet expect Alphabet to post quarterly earnings per share (EPS) of $2.12, with revenue expected to hit $96.68 billion. Those polled by London Stock Exchange Group (LSEG) yield a slightly higher EPS estimate of $2.13, though LSEG also forecasts lower revenue, at $96.56 billion.

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

Shares of Google parent Alphabet (NASDAQ:GOOGL) are roughly 1.3% up in the opening minutes of trading today, ahead of a crucial earnings release this evening.

Tech stocks across the board are rising, as markets respond positively to an overnight climbdown on punitive tariff regimes from US president Donald Trump.

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

Jefferies analysts believe that ad spend could be a positive for Alphabet when it releases earnings this evening.

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.

“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.

The Nasdaq 100 is up about 0.9%, having recovered most of yesterday's losses.

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.

Garry White, chief investment commentator at wealth manager Charles Stanley, is expecting Alphabet management to field questions about its AI investments, just as Meta did last week.

"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

Alphabet beats earnings estimates, meets revenue expectations

Alphabet has released its earnings for Q4, and earnings per share (EPS) of $2.15 is ahead of consensus analyst estimates of $2.13.

Revenue of $96.47 billion is a shade under what had been expected.

Google Cloud revenue up 12% year-on-year

Google Cloud revenues are up 30% to $12 billion. This is roughly in line with what Morningstar had forecast ahead of earnings.

"Our AI-powered Google Cloud portfolio is seeing stronger customer demand," says Google and Alphabet CEO Sundar Pichai.

Google Services revenues increased 10% to $84.1 billion. Of that, Google advertising came in slightly ahead of expectations, at $72.46 billion.

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:

Google Serves (total): up 10.2% to $84.09 billion.

Google Cloud: up 30.06% to $11.96 billion.

Sundar Pichai addresses investors in earnings call

Sundar Pinchai, CEO of Alphabet and Google:

“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.”

Google Cloud customers now consume eight times the compute resource, thanks to the increased demands of AI, he adds.

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.

"This is a positive read for the broader AI trade, especially for players like Nvidia, which stands to benefit from the surge in AI infrastructure spending."

Alphabet shares are now down over 7% in after-hours trading.

The crunch section of the earnings call is yet to come, though. So far, CEO Sundar Pinchai and other senior executives have been going through their prepared remarks. We'll get a real sense of what analysts make of the results when questions start at the end of the prepared section.

The future of Google search

Google and Alphabet CEO Sundar Pichai is answering questions on the future of Google Search.

"I feel that with the opportunity of AI, there's a lot of opportunity ahead," he says.

Pichai: DeepSeek points towards the future of AI use cases

First question referencing DeepSeek is in, directly in relation to the "AI cost curve".

"For us, it's always been obvious that.... you can drive a lot of efficiency to these models over time," says CEO Sundar Pichai.

Pichai references the trend towards spend on inference increasing, as opposed to training.

"I think part of the reason we're so excited about the AI opportunity is that we know we can drive extraordinary use cases, because the cost will keep coming down." That, he says, is going to keep driving AI.

"Free tier and subscriptions" the immediate focus for Gemini

An interesting final question on how Google plans to monetise Gemini. Pichai replies that putting the product out into apps has had a positive reception in terms of adoption.

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.

Thanks for following the blog today. We'll be back tomorrow with more reactions and analysis to Alphabet's earnings.

Why cheaper AI isn't necessarily bad news for Alphabet, Amazon or Nvidia

Good morning, and welcome back to our tech earnings live blog.

Shares in Alphabet ended 7.6% down in after-hours trading yesterday, following a narrow earnings beat, as investors reacted negatively to a miss on Google Cloud revenue.

“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.

Shares in Amazon, which announces earnings tomorrow, also fell 1.2% after-hours. Nvidia stock actually made small gains, but its stock is still down 17.9% over the past month, as concerns about the falling costs of producing AI following DeepSeek's emergence eats into the share prices of the big tech firms that build its infrastructure.

However, Britzman thinks these concerns could be misplaced.

“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.

Quarterly earnings per share came in at $1.09, compared to $1.08 forecast by analysts polled by London Stock Exchange Group (LSEG). Quarterly revenue of $7.66 billion was a little ahead of the $7.53 billion forecast by LSEG analysts.

When are the next Magnificent Seven results?

Tomorrow evening, Amazon (NASDAQ:AMZN) releases its earnings.

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.

Revenue grew 20% year-on-year to $12 billion, beating estimates of $11.8 billion.

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.”

The company is spending a lot of money to prepare for autonomous vehicles, which could be another reason why investors are fleeing the stock despite the strong earnings beat.

Amazon results: earnings and revenue expectations

Let’s start looking ahead to Amazon’s earnings announcement tomorrow evening.

The headline expectations from analysts polled by FactSet are as follows:

Q4 earnings per share (EPS): $1.48

Q4 revenue: $187.35 billion.

These figures, if accurate, would represent year-on-year increases of 48% and 10.2%, respectively.

Expectations from analysts polled by London Stock Exchange Group (LSEG) have EPS slightly higher at $1.49, and revenue expectations fractionally lower at $187.3 billion.

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 are forecasting growth in the region of 19.1% for the division. Based on the equivalent period last year, that would imply AWS revenue of $28.82 billion.

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

US tech stocks are having one of those days today.

The S&P 500 is down a little over 0.1% so far today, while the tech-heavy Nasdaq 100 is down 0.3%.

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

Good morning, and welcome back to our tech earnings live blog.

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?

Arm Holdings (NASDAQ:ARM), the chip design company based in Cambridge, UK, also saw its American depository shares fall by 6.3% in after-hours trading, despite a strong earnings report.

Quarterly earnings per share (EPS) of $0.39 beat analyst estimates of $0.34, while revenue of $983 million was ahead of analyst estimates of $949 million.

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.

If so, this heaps pressure on Amazon to deliver strong results tonight. Investors are clearly a little jittery about tech valuations, and the stock could fall even if there are no big negative surprises.

Why has Qualcomm fallen?

Similarly to Arm, Qualcomm (NASDAQ:QCOM) posted a strong earnings report but still saw shares fall 4.6% in after-hours trading. Quarterly earnings increased 24% to $3.41 per share, well ahead of analyst estimates of $2.96. Revenue came in at $11.67 billion, compared to estimates of $10.91 billion.

Revenue guidance for the current quarter was also strong, at $10.3 billion - $11.2 billion, compared to analyst forecasts of $10.3 billion.

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

DeepSeek has put the capital expenditure (capex) of the big tech firms in the spotlight through earnings season so far. Amazon is unlikely to be any exception here.

CEO Andy Jassy previously promised $75 billion on capex for 2024, and suggested this would increase in 2025.

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.

AMZN stock to open up ahead of earnings?

As the final trading session before its earnings release approaches, Amazon shares are currently up 0.8% in pre-market trading.

Some market optimism creeping in ahead of the release?

Strong open for AMZN stock

Amazon shares have indeed opened up by 0.9% on yesterday's close.

There's a little positivity in US markets today, as fears of tariff-related disruption subside.

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.

Besides headline analyst expectations of $1.48 earnings per share and $187.35 billion in revenue for the quarter, the big areas to watch are growth in cloud division Amazon Web Services, which analysts estimate will be somewhere between 19.3 - 20%, as well as its capex forecasts.

“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”.

The analysts cite data from Adobe Analytics that suggest a 9% year-on-year increase in sales during November-December.

Let's pause on Amazon for a moment and look at semiconductor company Arm

Moving away from Amazon for a moment, let's look at semiconductor company Arm, which reported its results yesterday. The company has seen share price declines since its results, despite a strong earnings report overall.

The important context behind Arm’s share price decline is the increased capex projections from AI firms.

As James Ford, senior analyst at Charles Stanley, explains to MoneyWeek:

“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%.

Just to recap, analysts had forecast EPS of $1.48, meaning the company beat EPS expectations by more than 25%.

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 Web Services: sales on the lower end of analysts' expectations

Within the Amazon Web Services segment, sales increased 19% year-on-year to $28.8 billion. This was on the lower end of analysts' expectations. They had forecast somewhere between 19.3% and 20%.

Amazon stock falls as Q1 outlook disappoints

Although Amazon's earnings beat expectations, the stock has fallen in after-hours trading on account of a worse-than-expected Q1 outlook.

In its forward-looking guidance, the company said it expects to achieve revenues of between $151 billion and $155.5 billion in the first quarter of 2025. This would constitute growth of between 5 and 9%. Analysts were expecting a higher figure of $158 billion.

"This guidance anticipates an unusually large, unfavourable impact of approximately $2.1 billion, or 150 basis points, from foreign exchange rates," the company explained. "Also, as a reminder, in first quarter 2024, the impact from the leap year added approximately $1.5 billion in net sales," it added.

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.

The company has previously justified higher capital expenditure by pointing to the growing need for technology infrastructure.

Speaking on the earnings call last quarter, chief financial officer Brian Olsavsky said: "This primarily relates to Amazon Web Services as we invest to support demand for our AI services".

With AWS sales coming in on the lower end of analysts' expectations in Q4, shareholders may wish to understand whether Amazon's investment in this part of the business is currently delivering good value for money.

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.

AWS revenues were in line with expectations last night, albeit slightly on the lower side of estimates. The company reported year-on-year revenue growth of 19% in this segment (versus analyst estimates of 19.3%-20%).

In light of how other tech companies have performed in the cloud space so far this earnings season, Matt Britzman, senior equity researcher at Hargreaves Lansdown, suggests Amazon has shown some real strength.

He says: "Amazon showed it is king of the cloud game as the only one of the three major cloud providers to deliver against expectations.

"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?

Josh Gilbert, market analyst at investment platform eToro, has described Amazon's results as "mixed". In his view, the growth in AWS sales was not as big as it could have been given how much is being spent in the area. That said, he acknowledges that big spending is necessary to stay in the game.

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."

Furthermore, although it wasn't a great result for investors this time around (in spite of the significant EPS beat), Gilbert says it is important to take a long-term view.

"As AI capacity grows, so will revenue and profit," he concludes. "That may not happen overnight, but some patience may be needed for investments to bear fruit."

Overall, Amazon remains "in great shape"

Despite some areas of disappointment in Amazon's Q4 results, investors shouldn't lose sight of the fact that this is a very strong business.

Dan Coatsworth, investment analyst at AJ Bell, acknowledges the challenges but says it is important to remember that Amazon continues to innovate and raise the bar.

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.

"It can afford to take this approach because of the significant cash flow generated by the group."

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.