Investors are headed into an important earnings cycle, but this time big tech has reportedly seen some of the slowest growth in profits in two years.
Giants like Microsoft, Meta, and Tesla will report their earnings today, followed by Apple, Alphabet, and Amazon later in the week. These companies will most likely be gearing for a slowdown in profits, Bloomberg reported, which could put pressure on valuations.
READ: Nvidia loses $600 billion amid DeepSeek rise (January 28, 2025)
This slowdown in growth however, cannot be blamed on the release of DeepSeek earlier this week. So, it would seem that the AI market, particularly in the west, is facing other challenges.
China shook up the market with its release of DeepSeek AI, which claimed to be developed at a paltry sum of $6 million, a fraction of development cost compared to its counterparts in the west. This aspect might also be a subject in the coming earning calls, with companies addressing the ballooning cost of AI development.
Here is the latest on the earnings this quarter from three of “Magnificent Seven,” according to MoneyWeek.
Meta earnings expectations
Meta (NASDAQ:META) is the third Magnificent Seven stock to announce earnings today. Analysts polled by FactSet forecast quarterly EPS of $6.76 on revenue of $46.99 billion. LSEG’s poll expects revenue to come in a shade over $47 billion, and EPS to come in at $6.77.
These estimates imply a 52.6% year-on-year increase in full-year earnings.
Microsoft earnings expectations
Another stalwart of the big tech scene and a key player in the AI rally, Microsoft (NASDAQ:MSFT) also announces earnings this evening.
FactSet analysts expect Microsoft’s earnings to reach $3.11 per share for the most recent quarter, with a consensus revenue estimate of $68.9 billion. Analysts polled by LSEG expect revenue to come in a shade lower, but yield the same consensus earnings estimate.
READ: China disrupts AI market with DeepSeek: A better, cheaper version of ChatGPT? (January 27, 2025)
LSEG’s estimates imply a 13.5% year-on-year increase in revenue, with annual EPS expected to increase by 10.1%.
Tesla earnings expectations
Tesla (NASDAQ:TSLA) is expected to post earnings per share of $0.77 on revenue of $27.2 billion for the fourth quarter of 2024, according to analysts polled by FactSet. Analysts polled by London Stock Exchange Group (LSEG – formerly Refinitiv) yield a consensus EPS estimate of $0.75, with the same revenue figure expected.