Microsoft, Meta, Amazon and other revenues will be Tech-Stock Rally’s test

Tech earnings season is here, and with the sector flying high, investors will be looking for reasons to stay positive after a blockbuster first half.

Over the next two weeks, five of the largest companies in the technology sector will report results for the June quarter that will set the tone for the second half of the year. Figures from Microsoft (ticker: MSFT), Alphabet (GOOGL) and Meta Platforms (META) will arrive in the first week, followed by Apple’s (AAPL) and’s reports next week.

With all five stocks boasting strong gains so far this year, the risk is that even small disappointments in results or guidance could trigger a round of profit-taking. A few key tech companies checked in ahead of the big guns, and the early signs are troubling.

Netflix (NFLX), for example, is down 1[ads1]0% since its last earnings report. While the streaming video company had much higher subscriber growth than the Street had expected, both revenue growth and guidance disappointed investors.

German software giant SAP ( SAP ) fell 6% after June quarter results missed estimates as some customers remained conservative on IT spending. Chip equipment company ASML ( ASML ) fell after giving cautious comments, citing “continued macroeconomic uncertainty.” Taiwan Semiconductor (TSM) shares fell after the contract chipmaker said results continued to be hurt by weak sales of mobile phones and PCs, plus high customer inventories.

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Here’s a look at the main issues for each of the Big Five tech companies:

Microsoft: There are three main factors at play for Microsoft, which reports results on Tuesday. The company is up 43% this year, largely due to investor enthusiasm for its position in artificial intelligence software. Shares rose a few days ago after the company announced higher-than-expected prices for AI-based “Copilot” software for its suite of office applications. There isn’t much AI revenue at Microsoft yet, but any commentary on the technology’s future impact on business could boost the stock further.

Meanwhile, investors will be looking for signs that a recent slowdown in growth in the company’s Azure cloud computing business is bottoming out. Here too, demand for AI-related processing will be a factor.

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The offset will be the continued weakness in PC demand, which is affecting the company’s Windows and device businesses. A wildcard would be indicative of the AI-powered Bing chatbot gaining market share from Google in the internet search market.

Alphabet: The company is the parent of Google and YouTube, so the results will provide important clues about the health of the online advertising market. Recent Wall Street commentary has suggested that online ad spending has improved in recent months, potentially setting Alphabet up for solid earnings.

Like Microsoft, AI has played a major role in the stock’s 36% rally this year, so investors will be eager for updates on how the company sees the trend developing. But there is also some fear on the Street that rival AI chatbots such as ChatGPT and Microsoft Bing will eat into Alphabet’s dominance in search, and that the investment required to build AI software capabilities will increase capital spending.

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Another factor will be the growth prospects for the company’s cloud computing business. The company reports on the same day as Microsoft, another player in cloud computing.

Meta platforms: The parent of Facebook, Instagram, WhatsApp and now Threads has had a big year, with its stock up nearly 150%. Much of that reflects the company’s “years of efficiency” to bring down costs, which have included more than 20,000 job cuts.

Analysts see signs that Meta’s advertising business is improving as it finds ways around problems created in recent quarters by Apple’s privacy push for iPhone users, which made targeting more difficult. Investors will also be watching for signs of better revenue generation at Reels, the company’s TikTok clone. Another key will be comments on how the company plans to monetize its significant work on AI large language models.

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And what about the metaverse? CEO Mark Zuckerberg was once so enamored with virtual reality that he renamed the company, but there’s been little talk on that front in recent months. Not least, The Street will be eager for an update on Threads, the company’s new Twitter competitor, and any plans to start selling ads there.

Meta reports its earnings on Wednesday.

apple: Shares of Apple have risen 48% this year, increasing their market value to more than $3 trillion. But the company’s fundamentals have been soft.

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Revenue this quarter is expected to be down slightly from a year ago amid a weak market for both phones and personal computers, although an easing of supply constraints could mean higher profit margins. Investors will look to the company’s services business to offset a tougher consumer hardware market.

The next turns in the Apple story will likely involve future products. That includes the launch of the iPhone 15 this fall, the debut of the Vision Pro mixed-reality headset in early 2024, and potentially a push into the AI ​​chatbot market in competition with Bing, Bard and ChatGPT.

The wild card for Apple may involve geography. The company’s close ties to China, which accounts for almost 20% of sales, carry considerable risk. Apple reports results on August 3. Amazon shares are up 55% this year, fueled by optimism about improving performance from both its Amazon Web Services cloud business and its flagship online store.

Like the cloud businesses of Microsoft and Google, AWS has seen growth slow in recent quarters from customers who have “optimized” their cloud spending. But the view on the street is that the process is nearing completion and that the rise of generative AI will accelerate demand in the quarters ahead.

Meanwhile, easing inflation and solid consumer data bode well for online shopping. The company’s ad business should benefit from strengthening spending, as will Meta and Alphabet.

One point to watch is any updates on Amazon’s own plans for AI products. The company already develops LLMs and offers a suite of tools for AI software to AWS customers. Amazon also reports on August 3.

Write to Eric J. Savitz at

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