The last time Big Tech has made profits, Donald Trump had just started his mandate, the actions were showing the expectations of a pro-growth government program and the concern of investors was the duration of the duration of companies to convert their artificial intelligence expenses.
Three months later, they faced a much more sinking image.
The quarterly results of this week from Microsoft Corp., Apple Inc., Meta Platforms Inc. and Amazon.com will include on a market obsessed with each torsion of a trade war that has suffered 5.5 billions of dollars from the S&P 500 index. The concerns of AI have taken a rear seat on the possibility of a recession induced by the price, have become the day trade for investors also shaken to buy cheap shares.
Even with all the uncertainty, Wall Street does not give many estimates to companies. Analysts expect the so-called magnificent seven-who also include Google-Parent Alphabet, Tesla Inc. and Nvidia Corp. – To offer an average growth of 15% in 2025, a forecast which has barely moved since the beginning of March despite the rocket of trade tensions.
This increases the challenges of the four megacaps which report this week, which collectively have a weighting of almost 20% in the S&P 500. Traders are unlikely to forgive deficits of profits in an already frightening market climate, despite a sharp drop in prices of equity and improved evaluations. Disastrous perspectives of industry giants would also be badly received, especially if they strengthenfearsDeaf expenses of upcoming companies.
“Any minimum of a lower number than expected will cause a new sale because of the concern about prices,” said Phil Blancato, chief market strategist at Osaïc Wealth, who thinks that this year's weakness in megacaps is a purchasing opportunity.
The markets received early reading on how Big Tech could manage last week. Tesla reported herWorse quarterOver the years, although traders have applauded signs that Elon Musk chief executive intends to move away from his government work and focus more on the manufacturer of electric vehicles. Alphabetbeat expectationsBut offered little future advice. The magnificent index 7 Bloomberg jumped 9.1% last week in the middle of a wider market rebound, although it is still down 15% in 2025.
Profits and expenses
A deeper look occurs during a two -day section that starts with the results of Meta and Microsoft on Wednesday. While many executives have refused to predict how prices could have an impact on their results, Wall Street has made its own mathematics. Based on a tariff rate of 22% modeled by Bloomberg Economics, a drop in gross margins could lead to a net contraction on income of approximately 7% in 2025 for the S&P 500, compared to the current consensus estimate of almost 12% growth, wrote the chief strategist of Bloomberg Intelligence, Gina Martin Adams.
Another key area of attention will be expenses: the four largest expenditure – Microsoft, Alphabet, Amazon and Meta – should pay around $ 300 billion in capital expenses during their current years. While companies have undertaken to maintain this pace in 2025, MicrosoftSudden decisionTo take a break, work on certain data centers suggest that cloud computors can reassess expenses.
Apple, one of the companies most exposed to prices because of its dependence on its supply chain in China, can benefit from a demand from consumer demand seeking to avoid higher prices. However, these sales are considered a unique advantage, prices undergoing demand in the future quarters. Amazon faces pricing risks for its electronic and advertising activities, although a profits can be amortized by profits in its high -margin web service unit, according to Jefferies analyst, Brent Thill.
That said, the leaders are expected to give estimates with any degree of confidence, given the high level of macroeconomic uncertainty. American Airlines Group Inc. and Skechers USA Inc. are among the companies that haveabandonedForecasts this quarter.
Michael Shaoul, founder of the Macro-Fonds Ion, said that it would be difficult for managers to convince the market that they have a real vision of financial performance in the coming quarters.
“I think the more experienced management will not even try,” he said.
A bullish argument, of course, is that the dominant positions of the technology giant industry and robust balance sheets make them better suited to resist an economic slowdown than other companies – even if the image of the benefits is cloudy. The magnificent seven are also less valued after the recent sale: alphabet, for example, is negotiated at 17 times the benefits estimated in the next 12 months, compared to an average in the last decade of 21 times, according to data compiled by Bloomberg.
This could stimulate the attraction of the Magnificent Seven to Lower buyers, especially if the signs of relaxation in the World Trade War emerge. A flash came last week, when the actions climbed after TrumpsaidAn agreement with Beijing would considerably reduce the prices he posted on Chinese products.
But for Keith Lerner, co-chief of investments and chief strategist of the market at Truist Advisory Services, everything comes down to the denominator in the price / profit ratio.
“The evaluations become more interesting here, but we have not yet reached the trigger,” he said. “There are a lot of questions on the electronic side of the equation.”
This story was initially presented on Fortune.com
