{"id":5669,"date":"2025-05-17T13:38:41","date_gmt":"2025-05-17T05:38:41","guid":{"rendered":"https:\/\/cicserver.com\/big-tech-earnings-defy-fears-of-worst-case-scenario-for-stocks\/"},"modified":"2025-05-17T13:38:41","modified_gmt":"2025-05-17T05:38:41","slug":"big-tech-earnings-defy-fears-of-worst-case-scenario-for-stocks","status":"publish","type":"post","link":"https:\/\/cicserver.com\/de\/big-tech-earnings-defy-fears-of-worst-case-scenario-for-stocks\/","title":{"rendered":"Big Tech Earnings Defy Fears of \u2018Worst-Case Scenario\u2019 for Stocks"},"content":{"rendered":"


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(Bloomberg) — Investors in the US technology behemoths that dominate the S&P 500 Index are breathing a sigh of relief as last week\u2019s earnings reports from the group show their outlooks remain mostly strong in the face of President Donald Trump\u2019s shifting trade policies.<\/span><\/p>\n

One after another, tech giants from Amazon to Microsoft Corporation unveiled forecasts that suggest demand remains largely intact for businesses including electronic devices, cloud computing services, software and digital advertising. While the reports were by no means perfect \u2013 Apple was a high-profile\u00a0disappointment\u00a0\u2013 they eased many of the worst-case fears that the firms would signal a tariff-induced profit slump was on the immediate horizon.<\/span><\/p>\n

It was an encouraging stretch for investors seeking signs that the stock market\u2019s rebound potentially has legs. The tech-heavy Nasdaq 100 Index took its two-week rally to 10% and is now almost 3% above where it closed on April 2, before <\/span>Trump unleashed tariffs<\/a><\/span> on virtually all of America\u2019s largest trade partners. Microsoft led gains in the so-called Magnificent Seven megacaps, with its best week in more than two years.<\/span><\/p>\n

\u201cA lot of investors were braced to hear things that were very grim,\u201d said Mark Luschini, chief investment strategist at Janney Montgomery Scott. \u201cEven numbers that were a little weak were far from the worst-case scenario. That\u2019s allowing the market to take a glass-half-full view, even though the situation remains foggy, and the rebound could be jeopardized by any emerging signs of a slowdown.\u201d<\/span><\/p>\n

Related:<\/span>Edge and Hyperscale Data Centers in the AI Era: Explosive Demand and Important Risks<\/a><\/p>\n

Of course, the threat of renewed volatility hangs over the tech giants as the trade war drags on. It will also take until the next earnings cycle to see how the sector actually performed once Trump\u2019s levies took effect. Until the picture is clearer, Luschini said he\u2019s avoiding big sector bets and holding defensive shares, along with tech stocks linked to long-term growth trends.<\/span><\/p>\n

Big Tech companies have been at the center of the selloff in US stocks that\u2019s shaved about 3% off of the S&P 500 this year as traders pocketed profits on the cohort and shifted into defensive assets. The worry is that tariffs will fan inflation and stifle economic growth. The market got some reassurance on Friday from a strong jobs report, as well as hints of possible trade\u00a0<\/span>talks<\/a><\/span>\u00a0between the US and China.<\/span><\/p>\n

Still, the underlying uncertainty has caused companies including airlines, shoemakers and retailers to withdraw forecasts and take a cautious approach to spending. Most of the tech giants bucked that trend.<\/span><\/p>\n

Of the six Magnificent Seven companies that have reported, four gave revenue forecasts that were either roughly in line or exceeded Wall Street estimates. Google parent Alphabet kept with tradition and didn\u2019t provide one. Nvidia Corporation, the last to report, is scheduled to announce results on May 28.<\/span><\/p>\n

Microsoft\u2019s revenue forecasts for the current quarter topped expectations thanks in part to strength in its\u00a0Azure\u00a0cloud-computing business, where demand continues to outstrip its data center capacity. Amazon\u2019s operating profit outlook was\u00a0weaker\u00a0than expected, but Chief Executive Officer Andy Jassy said it hasn\u2019t \u201cseen any attenuation of demand yet.\u201d Meta offered reassurance about the\u00a0outlook\u00a0for digital ad-spending with a forecast that was roughly in-line with analyst estimates.\u00a0<\/span><\/p>\n

Spending Leeway<\/h2>\n

The earnings season has also calmed worries about capital spending on artificial-intelligence computing gear, which has fueled a revenue boom for companies like Nvidia and Broadcom Inc. Meta raised its forecast for capital expenditures this year, and Microsoft said growth in such outlays would slow next year but still rise.\u00a0<\/span><\/p>\n

The comments sent shares of chipmakers and computing hardware makers higher.\u00a0<\/span><\/p>\n

\u201cTech companies are getting more leeway to spend, because they\u2019ve shown it can deliver returns and support growth,\u201d said Hanna Howard, a portfolio manager at Gabelli Funds.<\/span><\/p>\n

It wasn\u2019t all good news, however. Tesla Inc. backed away from a prior forecast to return to revenue growth in 2025, and Apple said it\u00a0<\/span>expects<\/a><\/span>\u00a0$900 million in higher costs from tariffs in the current quarter. The iPhone maker was hit with at least two Wall Street\u00a0downgrades, with the analysts citing tariff headwinds and growth concerns.<\/span><\/p>\n

While profit estimates in many S&P 500 sectors have fallen this earnings season, projections for tech giants are climbing. According to Bloomberg Intelligence, earnings for the Magnificent Seven are seen rising 21.6% in 2025, while revenue is expected to grow 9.7%. Both estimates have risen in the past week.<\/span><\/p>\n

\u201cThere was a lot of concern that we\u2019d see a more drastic pullback, but based on what we\u2019ve seen, things look much better than expected,\u201d Gabelli\u2019s Howard said. \u201cThere\u2019s certainly a concern that things could get worse, but for the most part it has been pretty positive.\u201d<\/span><\/p>\n<\/div>\n