Magnificent Seven Earnings Preview: Can Big Tech Reclaim AI Leadership?

Nasdaq 100 Key Points

• The Magnificent Seven enter earnings with far more divided performance than in previous years, as investors increasingly distinguish between companies supplying the AI buildout and those funding it.
• The defining themes will be the return on record AI investment, cloud and agentic AI monetization, competition between Nvidia and hyperscaler-designed chips, digital advertising strength, and Apple’s attempt to turn its installed device base into an AI advantage.
• The Nasdaq 100 has broken below its widely watched symmetrical triangle pattern, opening the door for more downside if Magnificent Seven companies can’t deliver a clear path to ROI on AI investments.

Magnificent Seven Earnings Preview: MSFT, AAPL, GOOGL, AMZN, NVDA, META and TSLA

For much of the last several years, the Magnificent Seven traded as different versions of the same theme. Falling interest rates, resilient earnings and enthusiasm around artificial intelligence lifted nearly every member of the group, even when the underlying businesses and exposures differed substantially.

That relationship has weakened heading into the latest earnings season.

Source: StoneX, TradingView

Semiconductor stocks have generally led the most recent phase of the AI rally, while several hyperscalers have struggled as investors questioned the cost of building the infrastructure that supports it. The concern is no longer whether artificial intelligence will create demand. Instead, the market is debating which companies will capture the economic returns and how long shareholders must wait for those returns to show up in free cash flow.

That makes the coming reports particularly important for the Nasdaq 100. A strong set of results could help restore leadership to the mega-cap platforms, especially if cloud growth and AI revenue continue to accelerate. Disappointing guidance or another sharp increase in spending without a matching improvement in monetization could reinforce the recent rotation toward chipmakers and other direct beneficiaries of the infrastructure boom.

Magnificent Seven Earnings Calendar

Company	Expected report date
Alphabet	Wednesday, July 22
Tesla	Wednesday, July 22
Microsoft	Wednesday, July 29
Meta Platforms	Wednesday, July 29
Apple	Thursday, July 30
Amazon	Thursday, July 30
Nvidia	Wednesday, August 26*

*Nvidia’s date is estimated and has not yet been formally confirmed by the company. The other dates have been announced through company investor relations materials.

Key Magnificent Seven Themes to Watch This Earnings Season

AI Spending Is No Longer Enough

The largest change this quarter is the market’s declining willingness to reward AI spending simply because it is large.

Amazon, Alphabet, Microsoft and Meta continue to invest heavily in servers, chips, networking equipment, power and datacenters. The spending is supporting extraordinary demand throughout the technology supply chain, but it is also weighing on free cash flow and increasing depreciation costs. Investors now want evidence that these investments are creating revenue faster than they are creating expenses.

Source: Bank of America

The standard is changing across the group. Management teams will be judged less on the size of their datacenter plans and more on revenue generated per dollar of capital expenditure. That shift raises the risk of sharp post-earnings reactions even if headline revenue and earnings exceed expectations.

Agentic AI Moves from Demonstration to Deployment

The AI conversation is also moving beyond chatbots and content generation toward agents capable of completing multistep tasks, using software tools and operating with less human involvement.

Microsoft said nearly 90% of the Fortune 500 had active agents built using its low-code and no-code tools at the time of its last earnings call. Alphabet said its enterprise AI products had become the main growth driver for Google Cloud, with revenue from products built on its generative AI models rising nearly eightfold from a year earlier. Nvidia has similarly positioned agentic AI as a major driver of demand for both computing and networking infrastructure.

This quarter, investors will want more than adoption statistics. They will be looking for evidence that agents are becoming meaningful paid products rather than experimental tools bundled into broader software agreements.

The companies that can connect AI usage directly to revenue growth will have an easier time defending their spending plans. Those relying primarily on broad claims about engagement or future opportunity may face a less forgiving response.

Custom Chips Complicate the Nvidia Story

Nvidia remains the clearest direct beneficiary of the AI infrastructure boom. Its latest quarterly revenue reached $81.6 billion, an increase of 85% from a year earlier, while datacenter revenue rose 92% to $75.2 billion. The company guided to approximately $91 billion of revenue for the current quarter despite assuming no datacenter compute revenue from China.

Those numbers suggest demand remains exceptional. However, one of the most important themes this season will be the rapid development of custom chips by Nvidia’s largest customers.

Amazon said its Graviton, Trainium and Nitro chip businesses had exceeded a $20 billion annual revenue run rate and were growing at triple-digit rates. It has also secured large Trainium commitments from both OpenAI and Anthropic. Alphabet, meanwhile, introduced its eighth generation of tensor processing units and said its latest inference chip delivered 80% better performance per dollar than the previous generation.

These products are unlikely to displace Nvidia broadly in the near term. Both Amazon and Alphabet continue to deploy Nvidia GPUs alongside their own silicon. But custom chips could gradually capture a larger share of predictable, high-volume workloads, particularly inference, where cost and energy efficiency are crucial.

For Nvidia, the earnings debate will therefore extend beyond whether demand remains strong. Investors will also be listening for evidence that its networking, software and next-generation Vera Rubin systems can preserve the company’s economic advantage as customers seek lower-cost alternatives.

Digital Advertising Remains the Profit Engine

While AI dominates the investment narrative, digital advertising remains the financial engine supporting much of the spending at Alphabet and Meta.

Meta’s first-quarter revenue increased 33%, with ad impressions rising 19% and the average price per advertisement increasing 12%. The company maintained a 41% operating margin despite a 35% increase in costs and expenses, demonstrating how effectively its advertising platform is currently absorbing its infrastructure investments.

The question is whether that performance can be sustained. AI-driven recommendation systems have improved engagement and increased the amount of monetizable content shown across Meta’s platforms. At the same time, artificial intelligence is making it easier for smaller businesses to create advertisements, target customers and measure results.

That creates a potentially powerful cycle: better recommendations improve engagement, while better advertising tools increase demand for the resulting inventory.

Meta’s challenge is convincing investors that these benefits will continue to outpace its rapidly rising infrastructure costs. The company spent nearly $20 billion on capital expenditures in the first quarter alone, leaving little room for a meaningful slowdown in its core advertising business.

Amazon’s advertising business will also be important. The company said advertising had surpassed $70 billion in trailing 12-month revenue, adding another high-margin growth engine alongside AWS. Investors will watch whether ad growth remains strong enough to offset some of the pressure from infrastructure investment and the lower-margin retail business.

Apple Finally Has an AI Story to Defend

Apple enters this earnings season in a notably different position from a quarter ago.

The company unveiled a new generation of Apple Intelligence and a rebuilt Siri at its June developer conference, giving investors a clearer picture of how AI could be integrated throughout the iPhone, Mac and broader Apple ecosystem. The strategy remains distinct from that of the hyperscalers. Apple is not trying to sell vast amounts of external computing capacity. It is attempting to use AI to make its existing devices and services more valuable.

That more measured approach has started to gain credibility, particularly because Apple does not face the same level of capital spending required by its cloud-focused peers. Its installed base gives it a direct distribution channel for new AI features, potentially allowing the company to monetize third-party and proprietary models without bearing the full cost of developing and hosting every model itself.

The immediate financial backdrop is also stronger than it was previously. Apple’s March-quarter revenue increased 17% to $111.2 billion, with records for total revenue, iPhone sales and earnings per share. Services reached another all-time high.

Investors will now look for signs that this strength continued into the June quarter, particularly across iPhone sales, China and Services. Commentary around the timing and geographic availability of Siri AI will also matter. A smooth rollout could strengthen the argument that Apple can benefit from AI without matching the spending of Microsoft, Amazon or Alphabet. Further delays would revive concerns that the company is falling behind technologically.

Nasdaq 100 Technical Analysis: NDX Daily Chart

Source: TradingView, StoneX

The tech-focused Nasdaq 100 is showing investors’ anxiety heading into earnings season. As of writing, the index has broken below its widely-watched symmetrical triangle pattern, setting the stage for a deeper pullback if earnings are anything less than stellar. From a technical perspective, the next support levels to watch include the 2.5-month low at 28,250, the 100-day MA near 27,500, and the previous record high from last year at 26,250. Continued aggressive AI CapEx, without a credible path to immediate monetization among the hyperscalers could bring all of these levels into play.

On the other hand, generally prudent expansion plans and evidence of imminent ROI on Ai expenditures could reassure investors, leading to a bounce off 28,250 support and potential for a recovery back toward the early summer highs in the 30,000+ area.

-- Written by Matt Weller, Global Head of Research

Check out Matt’s Daily Market Update videos on YouTube and be sure to follow Matt on Twitter: @MWellerFX