Catenaa, Sunday, April 26, 2026- Wall Street’s biggest tech stocks, with a combined market capitalization of $16 trillion, are set to report earnings next week, giving investors a read on whether the recent rally is sustainable.
Alphabet, Microsoft, Amazon, and Meta Platforms are set to report on Wednesday, followed by Apple, a day later.
The so-called Magnificent Seven, which also includes Nvidia and Tesla, has powered a four-week rally in the US equity benchmark, adding 13%.
Shares of Alphabet, Amazon, Nvidia, and Meta are all up more than 25% since the S&P 500 bottomed on March 30.
The rally comes after Big Tech spent the first three months of the year dragging down the S&P 500 amid concerns the companies are overspending on artificial intelligence.
The selloff washed out investor positioning in the stocks and compressed valuations, making the group ripe for a comeback.
The Magnificent Seven’s earnings are projected to expand 19% in the first quarter, compared with 12% for the rest of the S&P 500, according to data compiled by Bloomberg Intelligence.
So far, the cohort is off to a good start. Last week, Tesla beat Wall Street estimates for first-quarter adjusted earnings, though that was overshadowed by concerns about a jump in capital spending.
Nvidia, the world’s most valuable company, will be the last to report on May 20.
Expanding profits have helped keep a lid on valuations. Excluding Tesla, which trades at a nosebleed multiple, the group is priced at 25 times profits anticipated over the next 12 months, according to data compiled by Bloomberg.
That’s down from 29 times in October but still above the S&P 500 at 21 times.
There are risks, of course. Tech giants may have dominant market positions, but they’re not completely immune from macroeconomic problems. Plus, disappointments related to AI costs could derail the rally.
Earlier this year, higher-than-expected capital spending spooked investors and helped send Magnificent Seven stocks into a tailspin, falling 16% in the first three months of 2026, more than twice the decline in the S&P 500.
Combined capital expenditures from Microsoft, Alphabet, Amazon, and Meta are projected to be $649 billion in 2026, up from $411 billion in 2025, according to data compiled by Bloomberg.
The scale of investments, however, is taking a toll on cash flows. Amazon’s free cash flow is expected to be negative $13.3 billion in the first quarter, which would be the widest since 2022, when investments in things like warehouses soared to meet pandemic-fueled demand.
And Meta’s first-quarter free cash flow is projected to be $4 billion, the smallest in nearly four years.
