Mag 7 earnings preview

This is the second busiest week for US earnings season, and it comes after the S&P 500 has had its first 2-week losing streak since June. The highlight this week will be the first of the Magnificent 7 tech giants to report results for last quarter. This includes Meta, Microsoft and Tesla on Wednesday and Apple on Thursday.

Mag 7 remain crucial for S&P 500 earnings hopes

There is a lot of focus on mega-cap tech companies this earnings season, due to their outsized contribution to overall earnings growth on the S&P 500 in recent years. For example, last year, the Magnificent 7 contributed over 40% to the total return of the S&P 500, and three out of the top 5 contributors to YoY earnings growth on the S&P 500 last year were Magnificent 7 companies, including Nvidia, Microsoft and Alphabet.

The Magnificent 7 are expected to report blended earnings growth of over 20% for the last quarter, this compares with 4.1% for the rest of the S&P 500. This means that the magnificent 7’s performance this earnings season will ultimately determine the overall performance of the US blue chip index.

Demand for silver and gold outstrips the Mag 7 so far in 2026

Interestingly, the Magnificent 7 have lagged the overall S&P 500 so far this year, and their stock price performance has been lacklustre. Commodities have dominated global trading  this year, as the dollar debasement trade, geopolitical risks and the US distancing itself from its traditional allies have all led to a rotation out of US assets. This has benefitted gold and silver. Both metals have reached record highs that many would have considered unobtainable just a few months ago. Epic price swings in the silver price has seen the iShares Silver Trust record $40bn in turnover in just one day, that is on par with the turnover in S&P 500 ETFs. It is also nearly double the turnover in trading of the shares of Tesla and Nvidia, as commodities have taken the place of the Magnificent 7 for investors. To put the surge in demand for silver into context, a few months ago, turnover was $2bn a day.

Can the Mag 7 get back to the top of the S&P 500?

The question now is whether the Magnificent 7 behemoths can resume their leadership role at the top of the S&P 500 after a lacklustre start to Q1? The options market is pricing in a big reaction for tech stocks on the back of these earnings reports, especially for Meta and Microsoft. Current positioning suggests that traders expect these earnings reports to trigger a larger market reaction than the FOMC meeting, which also takes place on Wednesday. Positioning also suggests that Nvidia is the most important market event this quarter.

One misstep could see Mag 7 get punished

It has been a punishing earnings season so far. The KBW banking index is lagging the overall S&P 500 so far this year, after the largest banks in the US saw their share prices fall after reporting earnings. For example, JP Morgan may have reported $46.76bn in revenue last quarter, but its share price is down 8% in the past month, as investors were unimpressed with its future outlook. This suggests that one misstep by the Magnificent 7 could see their shares fall further behind.

Below, we dig deeper into the tech giants’ earnings reports.

1, Microsoft:

Investors want the hyperscalers to show them the money, after 2025 was the year of super-charged spending on AI capabilities. The market expects revenue of over $80bn for last quarter, and net income of $29bn. Gross profit margins are expected to dip slightly to 67.2%, which is still a healthy level, but does suggest that costs could remain elevated as Microsoft builds out its AI capabilities. EPS is expected to expand to $3.92 from $3.78 in Q3.

The focus will be on revenues generated from Microsoft’s cloud computing platform Azure. This allows businesses and governments to run AI applications and is dependent on Microsoft’s data centres. In recent months, bottlenecks have hindered expanding capacity at Microsoft data centres. The market will want to see an update on the speed with which Microsoft can get their data centres off the ground. If new data centre capacity slows, then this could hinder Azure growth in the future and it may hurt the company’s future guidance. Stable headcount is expected, which could offset AI-related costs from elsewhere.

Overall, the bar is low for Microsoft and if it can convince investors that its AI investments can be monetized, then we could see the share price stage a recovery, after falling 8% in the past 6 months. It is also underperforming the broader market and is lower by nearly 3% this year. As you can see in the chart below, this has depressed its P/E ratio, and Microsoft shares are at the cheapest level they have been for months.

2, Meta

The company’s share price is rallying into these results, but it is still lower by 5% in the past 6 months, and its P/E ratio is now below the average for the S&P 500, as you can see below.

The focus will be on Meta’s capex spending. The company was forced to cut its spending plans at the end of last year and it scaled back its plans for the ‘Metaverse’. However, the company still spent between $70bn and $72bn on AI last year, up from $39bn in 2024, and investors want to see this pay off.

Revenues are expected to come in at $51.2bn for last quarter, and net income is expected at $24.19bn. Gross profit margin is expected to remain elevated, although it could dip to 81% for last quarter, and the company may say that gross profit margin could compress further to 80% in Q1.

Meta’s lack of solid AI capabilities, for example it does not have large language models, could lead to questions about how quickly it can monetize its sizeable investments in AI to date. Investors want to know how Meta’s new reasoning models that are based on voice and vision are progressing. How investors react to this news could determine the share price response. Advertising revenues and how the company is adapting to tariff risks will also be in focus.

3, Tesla

Tesla’s share price has struggled in the past month and is lower by 10%. The bar is low for this earnings season. Analysts have revised down their forecasts for revenue growth, which now stands at $25.1bn for last quarter. Net income is expected at $1.5bn, and EPS at $0.44.

When it comes to Tesla, it is never just about earnings and numbers. The market is likely to focus more on the progress of full driverless car technology, and the ramp up of human-like robots, Optimus. This is expected to be the future of Tesla and could account for 80% of revenues in the coming years.

Q4 deliveries of Tesla vehicles fell 16% last quarter, and the company is losing ground in the EV space to its Chinese rivals. Energy storage is likely to be a highlight, as Tesla attempts to transform its at-home chargers into mini electricity networks that can challenge established energy grids.

As usual with Tesla, if Musk can convince the market that the future is bright and progress is continuing especially on driverless cars and cyber taxis, then the market may be willing to pick up Tesla shares after they fell 5% YTD.

4, Apple

Will Apple deliver more record sales? Q4 is seasonally very strong for Apple, and investors will be looking for a monster earnings report. The market expects Apple to report revenues of $138.4bn, and net income of $39.41bn. Profit margins are expected to rise to 47% for last quarter, and the company is expected to forecast rising profit margins in Q1. This is to be expected, as Apple has had more discipline around AI spending, especially vs. its Magnificent 7 peers.

However, there is concern that the recent surge in memory prices could compress Apple’s margins in 2026, and if they do scale back their forecasts then this could knock enthusiasm for the stock. iPhone demand could show double digit growth for the first time in 4 years, and service-based revenue growth is expected to remain stable.

Apple’s share price has tumbled in the past month and is down 6%, as tariff concerns and trade tensions with China continue to weigh on the company. However, the stock price is rallying into this earnings report, and if Apple can deliver the goods, then investors may bite.

Chart 1: The Magnificent 7 have underperformed the S&P 500 this year

Source: XTB and Bloomberg

Chart 2: Magnificent 7 P/E ratios and S&P 500 P/E ratio

Source: XTB and Bloomberg