Big Tech Earnings Set the Stage for a Crucial Week in the Bull Market

Two key days this week may shape the path of the U.S. stock market for the rest of the year. On Wednesday and Thursday, investors will hear from five of the market’s biggest players Microsoft, Alphabet, Meta, Amazon, and Apple as they release their quarterly results. Together, these tech giants make up roughly a quarter of the S&P 500 Index, meaning their performance and guidance could have an outsized influence on broader market sentiment.

‍

Beyond their financial results, investors will be closely watching what these companies say about the future of artificial intelligence. AI spending has been the main engine behind the ongoing three-year bull market, but growing uncertainty over when those investments will start paying off is beginning to temper some of the enthusiasm.

‍

“This week could decide whether the rally keeps going or takes a breather,” said Talley Leger, chief market strategist at Wealth Consulting Group, which oversees about $5 billion in assets.

‍

So far, the earnings season has delivered encouraging results. Roughly one-fourth of the S&P 500 has reported, and about 85% of those companies have beaten Wall Street expectations marking the strongest beat rate in four years, according to Bloomberg Intelligence.

‍

That strength has eased concerns about renewed U.S.–China trade friction and lingering credit risks across the banking sector. It has also reignited momentum in the S&P 500, helping the index rebound toward record highs after an early-October selloff triggered its worst week in nearly five months.

‍

The so-called “Magnificent Seven” Microsoft, Alphabet, Meta, Amazon, Apple, Nvidia, and Tesla have been central to that recovery. Together, they’ve driven nearly half of the S&P 500’s 15% advance this year. To keep that momentum alive, investors want clear signals from Big Tech that their massive infrastructure spending—much of it aimed at AI will not only continue but eventually pay off.

‍

According to Bloomberg data, Microsoft, Alphabet, Amazon, and Meta are expected to spend a combined $360 billion in capital expenditures this fiscal year, much of it directed toward AI initiatives. Analysts anticipate that figure could surge to nearly $420 billion next year.

‍

These investments have rippled across sectors, boosting everything from semiconductor and networking stocks to utility companies that power AI data centers. Nvidia now the world’s most valuable company and one of the biggest beneficiaries of AI-driven spending is set to report its own results on November 19.

‍

For now, the clearest revenue gains tied to AI can be seen in the cloud computing arms of Amazon, Microsoft, and Alphabet, which remain major focal points for investors. Meta, meanwhile, has credited its AI investments for improving ad targeting and user engagement across its social media platforms.

‍

Still, AI-related income lags far behind the scale of spending. Investors, however, appear willing to give these companies time, betting that their upfront investments will position them as leaders in the next phase of the technology revolution.

‍

“As long as we don’t see cracks forming in the AI capital-expenditure story or the outlook for AI monetization, that should be enough to keep the bull market intact,” said David Lefkowitz, head of U.S. equities at UBS Global Wealth Management, which oversees more than $4.5 trillion in assets.

‍

However, such aggressive spending comes at a cost. It’s beginning to weigh on one of Big Tech’s biggest strengths: earnings growth. The Magnificent Seven are projected to post profit growth of 14% for the third quarter down from 27% in the prior quarter, according to Bloomberg Intelligence. While that’s still nearly double the 8% earnings growth expected for the broader S&P 500, it would mark the group’s slowest pace since early 2023.

‍

Even so, history suggests the group could once again outperform expectations. Big Tech has consistently delivered earnings that surpass Wall Street forecasts, often fueling market rallies in the process.

‍

Leger of Wealth Consulting Group noted that strong earnings beats have been “the biggest source of strength” for the market this year.

‍

“That means expectations still have room to grow,” he added. “And that’s a good sign heading into this reporting season.”

‍

‍