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Big Tech earnings: AI powers growth, but tariffs and turbulence loom
Jacob Falkencrone
Global Head of Investment Strategy
Key points:
- Microsoft and Meta are successfully leveraging AI, providing resilience amid broader market uncertainty.
- Amazon and Apple face significant headwinds from tariff risks and slowing growth, requiring investor caution.
- The mixed performance of these tech giants could signal increased volatility ahead for the broader market.
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Mega-cap tech stocks aren’t just market giants—they set the tone for investor confidence across the globe. With Microsoft, Amazon, Meta, and Apple having just unveiled their latest quarterly numbers, the spotlight is firmly back on tech, illuminating both powerful AI-driven growth and looming risks from tariffs and economic headwinds.
Let’s dive into the numbers from these industry giants, exploring what their performance means not only for individual shareholders but also for broader market sentiment and stability.
Microsoft: Sailing smoothly on the AI wave
Microsoft has once again dazzled Wall Street, firmly anchoring itself as the sector’s AI powerhouse. Its Azure cloud platform surged by a remarkable 33%, fuelled by AI-driven demand, delivering total revenue of USD 70.1 billion and sending shares almost 10% higher.
CEO Satya Nadella’s confident assertion captures the moment perfectly: “Software is the most malleable resource we have to fight inflationary pressure—it's about doing more with less.” The tech giant remains committed to major investments in data centres, yet importantly, shows a measured approach towards maintaining profitability.
Takeaway: Stay confident in Microsoft's AI-driven momentum, but closely monitor its spending discipline as competition heats up.
Deep dive into Microsoft’s earnings here.
Meta: Boldly betting on AI, ads shine brightly
Meta’s strong earnings—revenue jumping to USD 42.3 billion—offered investors reassurance amid global uncertainty. Advertising proved resilient, and CEO Mark Zuckerberg confidently proclaimed, “We’re well-positioned to navigate macroeconomic uncertainty.”
Yet, Meta’s ambitious annual AI spending (USD 64-USD 72 billion) and heavy losses in its Reality Labs metaverse division add risk. Regulatory challenges in Europe further complicate the outlook.
Takeaway: Trust Meta’s core ad strength, but carefully track rising costs and regulatory developments.
Full Meta earnings details here.
Apple: China woes and tariff fears loom large
Apple’s latest results present a mixed picture. Revenue slightly beat forecasts (USD 95.4 billion), yet China revenues dipped worryingly by over 2%, and tariff pressures loom large. CEO Tim Cook warned investors about an upcoming USD 900 million quarterly tariff hit, admitting uncertainty around future pricing and supply-chain disruptions.
Apple is actively shifting its US-bound supply chains to India and Vietnam, yet remains highly exposed to China elsewhere. Incremental rather than groundbreaking product launches also leave innovation questions unanswered.
Takeaway: Keep a close watch on tariff impacts and upcoming product launches—they could either rekindle growth or deepen investor caution.
Amazon: Navigating heavy tariff turbulence
For Amazon, the waters are getting choppy. Quarterly sales beat forecasts at USD 155.7 billion, but a disappointing profit outlook—blamed squarely on tariff pressures and slowing cloud growth—sent a chill through investors.
CEO Andy Jassy sounded a cautionary note: “Tariffs are definitely our toughest navigational challenge right now.” With substantial retail inventory sourced from China, any prolonged tariff turbulence could erode Amazon’s margins, while slowing AWS growth adds another concern.
Takeaway: Watch tariff developments closely, and pay extra attention to AWS growth. Strong advertising performance could offer a buffer.
Explore Amazon’s full earnings analysis here.
Calm seas or gathering storm?
This earnings season reveals stark divisions among tech giants, highlighting broader implications for markets:
- Microsoft and Meta demonstrate impressive resilience, leveraging AI effectively to reassure investors and possibly stabilise broader market sentiment.
- Amazon and Apple reveal serious vulnerabilities around tariffs, supply-chain disruptions, and slowing innovation, raising wider questions about whether these risks could signal broader market volatility ahead.
For investors, the message is clear: tech remains pivotal, but caution is warranted. Navigating successfully means watching closely, diversifying wisely, and staying flexible as markets digest these tech giants' signals.
After all, investing in tech isn’t about avoiding storms—it's about learning to sail confidently through them.