Big tech earnings: Live updates as Tesla misses expected earnings

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.

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.”

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.

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.

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...

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 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.

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.

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.

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%.

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 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.

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.

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.

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.

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.”

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.

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.”

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.

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.”

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”.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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!