Earnings live: Microsoft, Meta stocks surge with more tech earnings from Apple and Reddit on deck

Second quarter earnings are largely positive, with S&P 500 EPS growth projected at 5.6% despite initial tempered expectations. Among key tech reports, Amazon beat profit and sales estimates, driven by 17% AWS revenue growth reflecting increased AI spending, though its stock slipped 2% after hours, potentially due to wider Q3 operating income guidance. Conversely, Apple exceeded top and bottom-line forecasts with $1.57 EPS and $94 billion revenue, boasting 10% growth across iPhone, Mac, and record Services revenue of $27.4 billion, leading to a 2% stock gain.

Analysis

The second-quarter earnings season is demonstrating resilience, with S&P 500 companies poised to deliver a 5.6% year-over-year increase in earnings per share, surpassing the initial 5.0% forecast that was tempered by concerns over tariffs and economic health. The results from Big Tech provide a divergent picture of market sentiment. Amazon (AMZN) exceeded Q2 profit and sales estimates, driven by a 17% rise in AWS revenue to $30.8 billion, which aligns with the strong cloud results from Microsoft and Google fueled by AI-related spending. However, the market reacted negatively, with the stock slipping 2% after-hours, a response likely attributable to the company's widened Q3 operating income guidance of $15.5 billion to $20 billion, signaling potential headwinds. In contrast, Apple (AAPL) reported a decisive beat on both top and bottom lines, with revenue climbing 10% to $94 billion and EPS reaching $1.57. This strength was broad-based, featuring double-digit growth in its iPhone, Mac, and Services segments, the latter of which hit a new record of $27.4 billion and now constitutes nearly 30% of total revenue. The market rewarded this performance with a 2% stock gain, underscoring a preference for clear growth narratives and margin stability.

Key Decisions for Investors

• Investors should note the market's heightened sensitivity to forward-looking guidance, as evidenced by Amazon's stock decline despite a strong earnings beat, prioritizing future profitability over historical performance.
• Apple's results reinforce the success of its diversification strategy; its record Services revenue, now a substantial portion of sales, suggests a more resilient and high-margin business model that is less dependent on hardware cycles.
• The strong cloud revenue growth reported by Amazon, alongside its peers, confirms the powerful tailwind from AI infrastructure spending, making exposure to leading cloud providers a key consideration for thematic portfolios.
• For Amazon, the primary focus should be on dissecting the Q3 operating income guidance to assess the potential impact of tariffs and other cost pressures on future margins.