Big Tech Earnings Roll In, But 2026 AI Leaders Remain Unclear

Investors have generated strong returns lately by targeting more specialized companies tied to the artificial intelligence boom. Now, earnings reports from the world’s largest technology firms will help determine whether that approach still makes sense heading into 2026.

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For much of the past three years, the so-called Magnificent Seven Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla have powered the broader stock market’s advance. That momentum, however, faded toward the end of 2025 as investors began questioning the massive sums these companies are pouring into AI development and how long it will take for those investments to translate into meaningful profits.

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An index tracking the Magnificent Seven hit a record high on Oct. 29. Since then, shares of five of the seven members have declined and underperformed the S&P 500. Alphabet, which has climbed nearly 20% over that span, and Amazon are the only two stocks that have managed to stay in positive territory.

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As enthusiasm for the mega-cap names cooled, traders shifted their focus to companies benefiting indirectly from Big Tech’s AI spending. Memory and storage producer Sandisk Corp. has surged more than 130% since the Magnificent Seven index peaked and pulled back. Micron Technology has rallied 76% over the same period, while Western Digital has gained 67%. Power generators, electricity producers, and even materials companies have also outperformed, supported by expectations of faster economic growth and relatively attractive valuations.

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“Technology stocks have become more of a ‘prove it’ story,” said Darrell Cronk, chief investment officer for wealth and investment management at Wells Fargo, which oversees $2.3 trillion in assets. He added that if Big Tech can continue delivering solid results, investor capital could once again rotate back toward the sector.

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Earnings from several key players arrive this week. Microsoft, Meta Platforms, and Tesla are scheduled to report on Wednesday, followed by Apple on Thursday. Alphabet, the strongest performer among the group last year, reports on Feb. 4, while Nvidia second only to Alphabet in recent performance posts results on Feb. 25. Amazon is set to release earnings on Feb. 5.

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Together, these reports will offer insight into a wide range of industries, including cloud computing, consumer electronics, enterprise software, and digital advertising.

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According to Intelligence, the group is expected to deliver fourth-quarter profit growth of about 20%, marking the slowest pace since early 2023. That backdrop increases pressure on the companies to demonstrate that their heavy capital spending on AI is starting to generate tangible returns.

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“We’re past the point where companies can barely beat expectations and still be rewarded while ramping up capital expenditures,” said Chris Maxey, managing director and chief market strategist at Wealthspire, which manages $580 billion. “They need to clearly outperform and show accelerating growth.”

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The clearest evidence of AI-driven growth has emerged in cloud computing, particularly in Microsoft’s Azure business. Azure provides computing power to corporate clients and has seen soaring demand from companies training AI models and deploying new services. In Microsoft’s fiscal first quarter, which ended in September, Azure revenue jumped 39% as demand exceeded available capacity. Wall Street expects Azure growth of around 36% in the company’s fiscal second quarter.

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Expanding that infrastructure comes at a steep cost. Microsoft, Amazon, Alphabet, and Meta are projected to spend roughly $475 billion on capital expenditures in 2026, nearly double the $230 billion spent in 2024. Investors are increasingly eager to see a payoff from that surge in spending.

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“If they fall short on growth, the market reaction could be severe,” said Clayton Allison, a portfolio manager at Prime Capital Financial, which oversees $40 billion. “But if we start seeing real returns on investment and improved profitability despite higher capex, that would ease many of these concerns.”

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Markets were reminded of the downside risk in late October, when Meta projected significantly higher capital spending for 2026 without clearly explaining how it would translate into profits. The stock dropped 11% the following day and remains about 17% below its August high. Analysts expect Meta’s fourth-quarter earnings per share to rise less than 2% year over year to $8.16, while revenue is forecast to increase 21%, according to data.

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Despite the recent pullback, avoiding Big Tech altogether is difficult given its sheer size. Including Alphabet’s dual share classes, the Magnificent Seven account for eight of the nine largest weights in the S&P 500 and represent more than one-third of the index.

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Even so, many investors remain reluctant to abandon the group. The companies continue to generate profits at a faster pace than the rest of the market. Intelligence estimates that the other 493 S&P 500 constituents will post just 8% earnings growth in the fourth quarter—well below Big Tech’s expected pace.

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Valuations also remain reasonable by historical standards. The Magnificent Seven index trades at roughly 28 times expected earnings over the next year, below prior peaks and close to its 10-year average. Nvidia, despite gaining more than 1,100% since the end of 2022, trades at about 24 times forward earnings, only slightly above the S&P 500’s multiple of 22.

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Still, investors are looking for a catalyst to reignite momentum. That catalyst will likely need to come from stronger growth and clearer evidence that AI spending is paying off.

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“I’m not sure this is the quarter when every question gets answered,” Cronk said. “But this earnings season will be viewed as an important checkpoint on that journey.”

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