Big Tech's biggest test yet

Magnificent Seven earnings are finally here.

The biggest week of quarterly reports hits a high note this afternoon when Alphabet and Tesla give investors their first read on AI spending, growth, and whether Big Tech’s massive investments are finally paying off.

Alphabet is expected to report EPS of $2.88 on $117.1 billion in revenue. But investors will be watching whether the company can justify another quarter of massive AI spending, with quarterly capex set to more than double to $45.1 billion. Shareholders are pinning their hopes on Google Cloud, which is forecast to report 63% year over year revenue growth.

Meanwhile, Tesla is expected to earn $0.55 per share on $27.3 billion in revenue. Investors will be focused on its robotics and autonomous driving ambitions, as Tesla ramps capital spending to about $25 billion this year—more than doubling last year’s total of under $10 billion—and burns an expected $2.9 billion in cash this quarter.

What to watch

Alphabet and Tesla will set the tone, but every Magnificent Seven company has a key number investors will be watching:

• Microsoft (down 19.29% YTD): Wall Street expects $87.7 billion in revenue and EPS of $4.24. Azure cloud growth—forecast at up to 40%—will be the key metric, while investors also look for a clearer path to expanding free cash flow margins.
• Meta Platforms (down 4.99% YTD): Analysts forecast $60.26 billion in revenue and $7.23 EPS, with investors looking for AI-driven improvements to keep fueling the company’s all-important advertising revenue.
• Apple (up 19.87% YTD): Wall Street expects $108.89 billion in revenue and $1.89 EPS, with iPhone demand taking center stage during Tim Cook’s final earnings call.
• Amazon (up 6.08% YTD): Analysts are looking for $196.98 billion in revenue and EPS of $1.82. Amazon Web Services growth will be the key metric, with Bank of America forecasting cloud revenue to accelerate by 33%.
• Nvidia (up 13.71% YTD): Investors will be looking for revenue of $91.8 billion and EPS of $2.08, and datacenter growth remains the key metric (as usual).

The spending spree continues

Capex will once again be at the center of this earnings season, especially as investors rotate out of the Magnificent Seven and into memory chip makers.

But there’s some good news: Analysis shows that Microsoft, Alphabet, Amazon, Meta, and Oracle will generate roughly $340 billion more in annual operating cash flow in 2027 than they did in 2025. Then again, combined capital spending is expected to increase by an even larger $534 billion over the same period.

But hey, at least there’s finally some tangible progress. Let’s just hope earnings tell the same story.—SY