Key Takeaways
- Tesla and Alphabet are due to report quarterly results after the closing bell on Wednesday, kicking off the earnings reporting season for the Magnificent Seven group of major technology companies.
- The big picture for S&P 500 company earnings is largely a question of the group of tech stalwarts’ health, and analysts expect that the numbers will be strong.
- Major tech companies, whose shares have largely underperformed the broader stock market this year, are under particular pressure to post results that exceed analysts’ expectations.
It’s Big Tech’s turn to turn in its numbers.
A pair of Magnificent Seven companies are set to report their latest financial results this week, with Alphabet (GOOGL) and Tesla (TSLA) due to report earnings after the closing bell Wednesday; another standout U.S. tech firm, chipmaker Intel (INTC), is set to release results late Thursday. The reports will jump-start the tech earnings season following Netflix’s (NFLX) results last week.
The big picture for S&P 500 company earnings is largely a question of the group of tech stalwarts’ health. The “Mag 7” is expected to turn year-over-year earnings growth of more than 14%, FactSet said Monday, compared with 3.4% for the rest of the companies in the index.
The stock market’s recent performance suggests that investors bet they can deliver. The tech-focused Nasdaq Composite last week notched closing records in all five trading sessions, then rose further Monday. Renewed interest in trading acronyms and meme stocks may also signal enthusiasm for stocks broadly.
Mag 7 Stocks Have Lagged the Broader Market
There are, however, signs of caution among investors regarding chasing stocks further: The Roundhill Magnificent Seven ETF (MAGS) is in the green this year, but it has underperformed the S&P 500 even after a strong close to the first half. Only three Mag 7 stocks—Nvidia (NVDA), Microsoft (MSFT) and Meta (META)—are beating the S&P 500 year-to-date.
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“Anyone investing in the S&P 500 index today is basically making a bet on the Magnificent 7 stocks propelling even higher,” Apollo Chief Economist Torsten Slok wrote earlier this month.
“The stakes are high for tech earnings season,” said State Street Investment Management Chief Investment Strategist Michael Arone, and this week will “set the tone.” Tech companies account for more than a third of S&P 500 earnings, he said, making their results “critically important” to sustaining stocks’ strengths.
It’s still early in the reporting season. Fifty-nine S&P 500 companies, representing about a fifth of index earnings, had reported as of last week, according to a Bank of America analysis. More than fourth-fifts of the companies to report, FactSet said, have turned in earnings above Wall Street’s forecasts; a similar percentage has done so for revenues.
Pressure on Big Tech to Top Expectations
As for this week’s Mag 7 reporters: At Tesla, shares of which were down about 19% this year through Monday’s close, options traders expect the stock to move more after earnings than it did after the first-quarter results arrived. Alphabet’s shares are little changed in 2025, and investors will watch its results for signs of the health and benefits of AI infrastructure spending, among other things.
Some market watchers say that the setup may put particular pressure on tech stocks to outperform expectations. Netflix may be an example: While its results were generally positive, investors appeared to be looking for more, and its stock fell Friday before recovering a bit yesterday.
“Tech stocks’ lofty prices and sky-high valuations will make it critically important they handily beat earnings estimates and deliver positive outlooks for the remainder of the year,” Arone said.