Earnings season heats up as major US tech stocks set to report over the coming weeks. Matt Britzman, senior equity analyst at Hargreaves Lansdown, has shared a preview of what’s to come.
Alphabet – Wednesday 23 July
“Alphabet has held up better than many feared, but it comes into next week’s second-quarter earnings with big questions to answer. There’s still a raging debate about the future of Google search, with new competition from language models like ChatGPT a genuine threat. Markets are expecting a slight slowdown in services growth, which includes Google advertising and other subscription revenue, to around 8.5%.
Cloud growth is the other key driver for Alphabet, with Google Cloud looking much more competitive for AI workloads than it was in previous cloud wars. Top-line cloud growth of 26% is expected, and investors will have one eye on margins as AI investment into both cloud infrastructure and its Gemini language models continues at pace. Alphabet has a quality lineup of businesses, but its long-standing crown as the entry point to the internet is under pressure, and that’s put the valuation under strain.
Tesla – Wednesday 23 July
It’s hard to remember a time when a set of financials mattered less for Tesla than next week’s second-quarter earnings. The investment case has moved on from the core auto business to an AI-driven future, and there’ll be more riding on Elon Musk’s commentary about the Robotaxi rollout than anything else.
The core auto business is in a challenging spot; Chinese competitors, often backed by government cash, are causing a tough market to be even tougher. In the US, there’ll likely be a pull forward in demand as buyers look to get in ahead of EV incentive cuts. But the reality is, Tesla’s c.$1 trillion market cap cannot be justified by simply selling a few more cars.
The next chapter is firmly about automation. The Robotaxi rollout is stage one, but the real goldmine will come if Tesla can ramp up production of its Cybercab next year. In the near term, any positive commentary on Robotaxi safety metrics or increasing fleet size will likely be good enough to offset any weakness in the core business.
Meta – Wednesday 30 July
Meta comes into second quarter earnings as one of the most obvious benefactors of AI to date. Its ad business has been putting new tools to good use by optimising ad targeting, engagement, and efficiency. Tariffs are an ongoing concern, and investors will be keen to hear if Meta is still confident in its ability to shift supply to other markets to make up any drop from areas like China.
Mark Zuckerberg has spent the past few months doubling, even tripling, down on his AI ambitions at Meta. Meta’s had some disappointing progress on its open-source language models, and it’s opening the check book to put things right. The creation of a new ‘superintelligence lab’ has caused quite the stir, with Meta rumoured to be dangling $100 million+ packages to poach AI talent. Investors will want to know whether there’s likely to be any change to the AI strategy with a new team taking the reins.
Microsoft – Wednesday 30 July
Microsoft is the king of quietly going about its business and nailing execution along the way. Cloud performance through Azure was stronger than expected last quarter, and there could be some upside to guidance of 34-35% growth in next week’s fourth quarter results if it’s been able to bring more supply online. Margins will be in focus as eyewatering AI investment continues, but as supply/demand dynamics become more favourable there should be a natural tailwind.
There’ll be keen interest in how efforts to boost efficiency are progressing. Recent reports suggest Microsoft has already saved over $500 million in annual costs by integrating AI into its customer service functions. Some analysts think there’s much more to come and will be keeping an eye out for any further commentary on AI driven cost savings.”
Amazon – Thursday 31 July
Cloud growth through AWS will be in focus when Amazon reports second quarter results next week. First quarter AWS growth of 17% was good but lagged its key competition. The aggressive 2025 investment guide is key and mirrors sentiments from other mega-cap players. Like Microsoft and Alphabet, Amazon noted it was leaving some cloud growth on the table as it couldn’t ramp up AI computer capacity fast enough – so the supply/demand dynamic will be closely watched.
The retail business is another focus with tariff uncertainty looming overhead. So far, performance has held up well, with no clear signs of a demand slowdown. Dominant players are best placed to not only ride out slower growth but also use their scale to gain market share. Margins are worth keeping an eye on too, there should be a benefit in the coming quarters from the scaling up of facilities and increased use of robotics.
Apple – Thursday 31 July
Investors will be hoping for more meat on the AI bone when second quarter results are delivered. Apple’s relatively disappointing developer conference had a distinct lack of news on the AI strategy and investors are rightly looking for some updates.
Apple’s approach to AI has fallen well short of what investors and consumers have come to expect from one of the world’s leading brands. Apple Intelligence has so far failed to deliver the game changing experience that was promised, so investors should watch out any updates on new AI features and where Apple stands with Siri, another product with huge potential but poor execution.
There’ll also be plenty of attention on any tariff impacts. Apple has already flagged a $900 million expected hit to profit in the second quarter, which sounds big, but is relatively small in the grand scheme of things. The positive news is that demand seems to be good despite tariff uncertainty and the failed AI rollout. There is still a good opportunity to drive a material iPhone upgrade cycle, but only if Apple can get its ducks in a row.
NVIDIA – Wednesday 27 August
The big news for NVIDIA is that it’s set to resume sales of its restricted H20 chip to China, following negotiations with the US government. Investors will be keen to hear any commentary on when licences will be granted and how long it will take for deliveries to ramp up. While these chips are significantly limited compared to NVIDIA’s latest technology, demand within China remains strong due to the lack of high-quality alternatives.
Don’t expect any meaningful impact in the upcoming second-quarter results, given that only a couple of weeks remain. However, taking a conservative view, new Chinese sales could drive a $10 billion uplift in revenue by year-end, potentially more if things move fast. NVIDIA may also be able to reverse some of the $4.5 billion inventory write-down from the first quarter, providing a direct boost to earnings.
Outside of China, overall demand remains critical. Markets have already heard from major customers that data centre expansion is a priority, which should benefit NVIDIA. Margins will also be worth watching. In theory, improvements should start to come through as deliveries of its latest chip technology continue to scale.”
