The S&P 500 Faces a Gauntlet of $11 Trillion in Earnings From Big Tech Companies

The S&P 500 Index’s steady climb to record highs faces a pivotal challenge this week as four technology giants, collectively valued at $11.3 trillion, release their earnings in a two-day span. This earnings season has started on a positive note, but attention now shifts to results from Microsoft Corp. and Meta Platforms Inc. on Wednesday, followed by Apple Inc. and Amazon.com Inc. on Thursday. These reports will offer critical insight into the strength of businesses spanning electronic devices, software, cloud computing, and e-commerce.

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For the S&P 500’s momentum to continue, strong performances from these companies are essential. These four firms, part of the so-called Magnificent Seven, make up 20% of the index’s market-cap weighting. Meta and Microsoft, alongside Nvidia Corp., are among the biggest contributors to the index’s gains this year. With valuations rising, investors will be closely monitoring not only whether these firms surpass earnings expectations but also how optimistic their guidance is for the upcoming quarters. Michael Arone, chief investment strategist at State Street Investment Management, noted that “the bar is set pretty high,” emphasizing that these tech leaders must deliver strong results to maintain market enthusiasm.

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Corporate America, thus far, has largely weathered President Donald Trump’s tariffs. About one-third of S&P 500 companies have reported earnings, and 82% have exceeded profit forecasts—positioning this quarter as potentially the best in roughly four years, according to Bloomberg Intelligence data. Since the reporting cycle began two weeks ago, the benchmark index has climbed about 2%. Analysts had previously cut profit estimates due to tariff-related concerns over consumer spending and shrinking margins. Even though expectations for Big Tech have been reduced, stock rallies have kept investor hopes elevated.

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The Magnificent Seven—which also includes Nvidia, Alphabet Inc., and Tesla Inc.—is projected to post a combined year-over-year earnings growth of 16% for the second quarter. This is down from 19% in March, prior to Trump’s sweeping tariff announcements. Nvidia will be the last of the group to report, with results expected in late August. Meanwhile, overall S&P 500 earnings are forecast to grow 4.5% annually, a decline from the 7.5% projected earlier this year.

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This environment increases pressure on Big Tech to issue optimistic forecasts to justify their lofty valuations. Anthony Saglimbene, chief market strategist at Ameriprise Advisor Services, believes these firms “will likely have to say that the rest of the year or the next quarter looks positive, either reaffirming guidance or even raising it.”

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Artificial intelligence (AI) has been a major factor driving a performance gap within the Magnificent Seven. Meta, Microsoft, and Nvidia alone account for nearly half of the S&P 500’s gains this year, while companies like Apple have struggled amid challenges adapting to AI-driven market trends. This divergence was evident last week when Alphabet shares rose on robust earnings, while Tesla plunged due to weak electric-vehicle sales projections.

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Capital expenditure plans will be another focal point for investors. Many tech giants have been ramping up spending on AI infrastructure, benefitting companies like Nvidia and Super Micro Computer Inc., both of which have emerged as top performers in 2025.

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Microsoft, Alphabet, Amazon, and Meta are expected to collectively invest $317 billion in capital expenditures during their current fiscal years, a figure projected to reach $350 billion by 2026, according to Bloomberg’s analyst estimates.

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While markets have rewarded these aggressive spending strategies—Meta’s shares have jumped about 22% this year—investors increasingly want to see tangible results. Gabriela Santos, chief strategist for the Americas at JPMorgan Asset Management, stated, “Investors are becoming much more overt in saying, ‘show me the money.’ At these levels, especially for large-cap tech, we need to see monetization rather than promises of future returns.”

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Valuations for the Magnificent Seven have recovered since the tariff-driven selloff in April, though they remain below peak levels. The group currently trades at 28 times projected earnings, down from 34 in December, while the S&P 500 trades at 22 times. Tony DeSpirito, managing director and head of US fundamental equities at BlackRock, argues that these valuations are still reasonable given the companies’ growth potential, strong free cash flow, and high returns on invested capital.

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As this crucial earnings week unfolds, the results and guidance from these tech heavyweights will likely determine whether the S&P 500 can sustain its record-breaking run or face renewed volatility in the months ahead.

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