Six of the “Magnificent 7” tech giants have reported their latest quarterly earnings and the results have received a mixed response from investors, with lingering concerns about an artificial intelligence (AI) bubble in markets.
The Mag 7 – made up of Tesla (TSLA), Microsoft (MSFT), Meta (META), Alphabet (GOOGL, GOOG), Apple (AAPL), Amazon (AMZN) and Nvidia (NVDA) – account for a significant portion of the S&P 500 (^GSPC) by market capitalisation.
Their results have become a central focus of each quarterly earnings season and expectations are high for performance.
However, a rapid rise in the valuation of Big Tech companies has led to fears of an AI bubble heading into this set of earnings, prompting some caution around how much these firms are spending on the technology and whether these investments are paying off.
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Following the release of Meta (META) and Microsoft’s (MSFT) earnings this week, AJ Bell (AJB.L) investment director Russ Mould said that the results “highlight the business models of the big technology firms are becoming more capital intensive, as they build out their AI capabilities”.
“That’s all well and good, if AI delivers the revenue streams the big tech CEOs are betting on,” he said. “And of course, if the pie is big enough for everyone to get a satisfactory slice.”
“However if that proves not to be the case, either at an aggregate sector or individual company level, the effect on share prices could be brutal,” Mould added.
With that in mind, here’s how the Mag 7 have performed so far this earnings season:
Elon Musk’s electric vehicle (EV) company Tesla (TSLA) missed earnings expectations in its third quarter results, released last week.
The company posted adjusted earnings per share (EPS) of $0.50, compared to estimates of $0.54. However, third-quarter revenue of $28.01bn (£21.36bn) came in ahead of expectations of $26.27bn, as per Bloomberg consensus estimates.
Operating expenses were up 50% year-on-year in the quarter to $3.43bn. Tesla said that the increase was driven by higher selling, general and administration expenses, as well as AI and research and development costs.
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Matt Britzman, senior equity analyst at Hargreaves Lansdown, said that the company’s “record research and development spend signals Tesla’s intent to go all in on its next-gen products”.
“That investment-heavy approach may weigh on margins now, but it underpins the long-term innovation story,” said Britzman, who holds shares in Tesla. “Elon Musk’s comments on 2026 and Robotaxi timelines were largely in line with prior guidance – progress will be incremental, which is sensible for a company under intense scrutiny.”
Shares fell on the back of the results, with the stock trading just 9% in the green year-to-date.
Shares in Facebook-parent Meta (META) tumbled following the release of its third quarter results, as a one-time, tax-related charge weighed on the company’s earnings.
While revenue of $51.24bn for the quarter beat expectations of $49.6bn, EPS of $1.05 was well below forecasts of $6.72, according to Bloomberg consensus estimates. The fall in earnings was due to a one-time, non-cash income tax charge of $15.93bn. Excluding this charge, EPS would have come in at $7.25.
Meta also said it expected to have higher capital expenditure for the year of $70bn to $72bn, up from previous guidance of $66bn to $72bn, as the company continues to invest in AI infrastructure. Meta CFO Susan Li said in her earnings commentary that the company expected that capex “dollar growth will be notably larger in 2026 than 2025”.
Hargreaves Lansdown’s Britzman said: “Meta’s quarter highlighted a familiar tension: strong user engagement versus rising costs.”
“[CEO Mark] Zuckerberg is betting heavily on AI infrastructure, which means profits will likely come under pressure in the near term,” he said. “He argues this is essential to secure a bigger long-term opportunity, but the trade-off is clear: higher costs now for uncertain future gains.”
The stock fell 11% in Thursday’s session, but shares are still up nearly 14% year-to-date.
Shares in Microsoft (MSFT) also fell following the release of its fiscal first quarter figures, despite topping expectations.
Microsoft reported EPS of $3.72 on revenue of $77.7bn for the quarter. Analysts were anticipating EPS of $3.68 on revenue of $75.5bn, according to Bloomberg consensus estimates.
The company’s commercial cloud revenue of $49.1bn grew 26% year-on-year and surpassed analysts’ expectations of $48.6bn.
However, Microsoft also reported that its capex increased 74% year over year to $34.9bn. Chief financial officer (CFO) Amy Hood said in Microsoft’s earnings call that the company expected “total spend will increase sequentially, and we now expect the FY26 growth rate to be higher than FY25”.
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Microsoft’s results came as the company’s Azure services recovered from an outage on Wednesday, impacting businesses around the world.
Ben Barringer, head of technology research at Quilter Cheviot, said: “While Microsoft (MSFT) only provided a small beat, it continues to execute strongly.”
“Capex will grow faster next year, showing the business is not done investing in the business and its future operations,” he said. “Indeed, we see that in the OpenAI agreement announced earlier this week, where Microsoft (MSFT) put forward $250bn of commitments. It is proving that it means business when it comes to AI development.”
Investors cheered Google-parent Alphabet’s (GOOG, GOOGL) latest results, as quarterly revenue topped $100bn for the first time and beat estimates.
Alphabet’s third quarter revenue came in at $102.35bn, compared to estimates of $99.85bn, while EPS of $2.87 also topped expectations of $2.26.
Hargreaves Lansdown’s Britzman said that Alphabet’s third quarter revenue silenced “doubters with standout performances in both search and cloud.”
“AI overviews and AI mode are clearly resonating with users, helping to ease fears that Google’s core search business is under threat from generative AI,” he said. “With ChatGPT’s recent browser demo falling short of a game-changer, Google looks well placed to put up a strong defence as gatekeeper to the internet.”
Shares in Amazon soared after its third quarter results beat forecasts on the top and bottom lines, as its cloud business grew faster than expected.
Amazon posted EPS of $1.95 on revenue of $180.2bn, which was better than analysts’ expectations of EPS of $1.58 and revenue of $177.8bn.
The company’s Amazon Web Services (AWS) cloud business brought in $33.01bn in revenue versus an anticipated $32.4bn.
AJ Bell’s Mould said: “The e-commerce division may have by far the bigger public profile but it’s the cloud services AWS division which is the real engine of Amazon’s growth and, it’s this which sparked the share price into life overnight.
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“Demand for computing power linked to AI is showing no signs of letting up and that is driving significant growth for AWS, with third-quarter numbers helping to ease fears that this business was losing ground to rival operators.”
AWS made headlines in October after it suffered a major outage which impacted companies and organisations across the globe, knocking out websites and apps for millions.
Amazon was once again in the spotlight on Tuesday, ahead of the release of its results, after announcing it would be cutting around 14,000 roles from its corporate workforce.
Mould said that announcement of cuts “is supposed to free up cash to invest in AI”.
“Although, whether a company of Amazon’s scale can really act like ‘the world’s largest start-up’, as CEO Andy Jassy wants it to, is open to question,” he added.
Apple (AAPL) also beat estimates on the top and bottom lines in its fiscal fourth quarter, though iPhone sales and revenue out of China fell just short of expectations.
The company posted fourth quarter EPS of $1.85 on revenue of $102.5bn, compared to an expected EPS of $1.77 on revenue of $102.2bn.
However, Apple’s iPhone business brought in $49.03bn in revenue, shy of expectations of $49.3bn. Greater China revenue was also lower than anticipated, coming in at $14.49bn versus expectations of $16.43bn.
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Quilter Cheviot’s Barringer said that the results offered a “mixed bag for investors”.
He said that Apple’s operating margin is coming “under pressure as the company increases capital expenditure, signalling continued investment in its ecosystem”.
“Looking ahead, Apple’s Q1 guidance of 10–12% revenue growth looks robust heading into the all-important Christmas period, underpinned by demand for the iPhone 17,” he said. “Still, with China uncertainty lingering and other tech giants like Microsoft (MSFT) and Nvidia (NVDA) offering faster growth stories, some investors may choose to look elsewhere in the short term.”
Shares initially in after hours trading following the release of the results, but hovered just below the flatline shortly following the US market open on Friday.
Investor attention will next turn to chipmaker Nvidia (NVDA), which typically reports later in the earnings season.
Earlier this week, Nvidia became the first company to be valued at over $5tn, buoyed by US president Donald Trump’s suggestion that the firm’s AI Blackwell chip could be discussed in his meeting with Chinese president Xi Jinping on Thursday.
While Trump said after the meeting, which resulted in two leaders agreeing to a year-long trade truce, that the Blackwell chips were not discussed, he suggested that there was a broader discussion about semiconductors.
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The US currently has export controls in place which have prevented Nvidia from selling its most advanced AI chips to China.
In addition to trade developments, Nvidia shares were also trading higher this week after CEO Jensen Huang announced a slew of partnerships at the company’s GTC event in Washington.
This included a $1bn (£756m) investment in Finnish telecommunications company Nokia (NOKIA.HE), as well as work with the US Department of Energy, Uber (UBER), Palantir (PLTR) and Oracle (ORCL).
In terms of guidance for its upcoming earnings, Nvidia said in its second quarter results release in August that it expected to generate revenue of $54bn, plus of minus 2%. That would be up from revenue of $46.7bn in the previous quarter and $35.1bn for the same three months last year.
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