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The market loved Meta Platforms' quarterly results but wasn't impressed with Microsoft's and Tesla's December-quarter numbers.
The market's disappointment with the Microsoft report notwithstanding, the company delivered +28.1% earnings growth on +16.7% top-line gains for the period, also handily beating estimates. The sticking point for investors was Azure and other cloud services revenue growth of +38% (in constant currency terms) and underwhelming guidance for the current period.
Worries about decelerating Azure growth have been weighing on Microsoft's shares, as has the company's relationship with OpenAI. Azure revenues were up +39% each in constant currency terms in each of the preceding two quarters, and the mid-point of guidance for the March quarter represents a +37.5% growth pace. Management has flagged capacity constraints as the primary reason for the growth deceleration, but market participants do not seem fully on board with that explanation.
Meta's Q4 growth numbers are a lot less impressive, with earnings and revenues up +9.3% and +23.8%, respectively, flagging the social-media bellwether's margin pressures. But what impressed investors is the company's ability to use AI more effectively in its advertising business. The notable AI-centric improvement in the business was the +3.5% increase in click rates on its ads, resulting in a +1% increase in conversion rates.
As with Microsoft, Meta claims to be capacity-constrained and unable to execute on all the ideas it has to streamline their ad business with the help of AI. It is this argument that allowed the company to get away with a further increase to its capex budget. They are currently targeting to spend $135 billion in capex this year, up from $72 billion in 2025 and $39 billion in 2024.
We will see how the market reacts to reports from Amazon and Alphabet this week, with the former reporting after the market's close on Thursday, February 5th, and the latter on Wednesday, February 4th. The expectation is that Amazon's earnings would be up +5.7% on +12.7% higher revenues, while Alphabet's quarterly earnings and revenues are expected to be up +17.5% and +16%, respectively.
The aggregate growth numbers for the Mag 7 group are impressive, with Q4 earnings on track to be up +21.9% from the same period last year on +18.1% higher revenues, following the group's +28.3% earnings growth on +18.1% revenue growth in 2025 Q3. Not all members of the elite group are equally contributing to the growth pace, ranging from Tesla's -53.4% earnings decline in Q4 and Nvidia's estimated +67.4% jump.
Please note that the Mag 7 group is on track to account for 25.2% of all S&P 500 earnings in 2025, up from 23.2% in 2024 and 18.3% in 2023. Regarding market capitalization, the Mag 7 group currently carries a 34.2% weight in the index.
The Mag 7 group has been enjoying a steadily improving earnings outlook, with analysts raising their estimates. We saw that trend in play ahead of the start of the Q3 earnings season, and something similar is in place for 2025 Q4 as well.
Q4 Earnings Season Scorecard
Through Friday, January 30th, we have seen Q4 results from 167 S&P 500 members or 33.4% of the index's total membership. Total earnings for these companies are up +13.1% from the same period last year on +7.6% higher revenues, with 77.8% beating EPS estimates and 64.7% beating revenue estimates.
We have more than 450 companies on deck to report results this week, including 127 index members. The week's lineup includes, besides the aforementioned Amazon and Alphabet reports, a representative cross-section of bellwether operators, including Disney, Palantir, Pfizer, Eli Lilly, AMD, Chipotle, Uber, Qualcomm, Ralph Lauren, and others.
Earnings and revenue growth rates remain strong and accelerating, but the EPS and revenue beats percentages are on the weak side.
The Earnings Big Picture
Estimates have actually modestly increased for 10 of the 16 Zacks sectors since the start of January, including Tech, Basic Materials, Autos, Industrials, Transportation, and others. On the negative side, estimates have come down for 6 of the 16 Zacks sectors, including Energy, Medical, Consumer Discretionary, and others.
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>>Taking Stock of the Q4 Earnings Season
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can access their live picks without cost or obligation.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Meta Platforms, Microsoft, Tesla, Amazon and Alphabet are part of Zacks Earnings Preview
For Immediate Release
Chicago, IL – February 2, 2026 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Meta Platforms (META - Free Report) , Microsoft (MSFT - Free Report) , Tesla (TSLA - Free Report) , Amazon (AMZN - Free Report) and Alphabet (GOOGL - Free Report) .
How Are Mag 7 Earnings Shaping Up?
The market loved Meta Platforms' quarterly results but wasn't impressed with Microsoft's and Tesla's December-quarter numbers.
The market's disappointment with the Microsoft report notwithstanding, the company delivered +28.1% earnings growth on +16.7% top-line gains for the period, also handily beating estimates. The sticking point for investors was Azure and other cloud services revenue growth of +38% (in constant currency terms) and underwhelming guidance for the current period.
Worries about decelerating Azure growth have been weighing on Microsoft's shares, as has the company's relationship with OpenAI. Azure revenues were up +39% each in constant currency terms in each of the preceding two quarters, and the mid-point of guidance for the March quarter represents a +37.5% growth pace. Management has flagged capacity constraints as the primary reason for the growth deceleration, but market participants do not seem fully on board with that explanation.
Meta's Q4 growth numbers are a lot less impressive, with earnings and revenues up +9.3% and +23.8%, respectively, flagging the social-media bellwether's margin pressures. But what impressed investors is the company's ability to use AI more effectively in its advertising business. The notable AI-centric improvement in the business was the +3.5% increase in click rates on its ads, resulting in a +1% increase in conversion rates.
As with Microsoft, Meta claims to be capacity-constrained and unable to execute on all the ideas it has to streamline their ad business with the help of AI. It is this argument that allowed the company to get away with a further increase to its capex budget. They are currently targeting to spend $135 billion in capex this year, up from $72 billion in 2025 and $39 billion in 2024.
We will see how the market reacts to reports from Amazon and Alphabet this week, with the former reporting after the market's close on Thursday, February 5th, and the latter on Wednesday, February 4th. The expectation is that Amazon's earnings would be up +5.7% on +12.7% higher revenues, while Alphabet's quarterly earnings and revenues are expected to be up +17.5% and +16%, respectively.
The aggregate growth numbers for the Mag 7 group are impressive, with Q4 earnings on track to be up +21.9% from the same period last year on +18.1% higher revenues, following the group's +28.3% earnings growth on +18.1% revenue growth in 2025 Q3. Not all members of the elite group are equally contributing to the growth pace, ranging from Tesla's -53.4% earnings decline in Q4 and Nvidia's estimated +67.4% jump.
Please note that the Mag 7 group is on track to account for 25.2% of all S&P 500 earnings in 2025, up from 23.2% in 2024 and 18.3% in 2023. Regarding market capitalization, the Mag 7 group currently carries a 34.2% weight in the index.
The Mag 7 group has been enjoying a steadily improving earnings outlook, with analysts raising their estimates. We saw that trend in play ahead of the start of the Q3 earnings season, and something similar is in place for 2025 Q4 as well.
Q4 Earnings Season Scorecard
Through Friday, January 30th, we have seen Q4 results from 167 S&P 500 members or 33.4% of the index's total membership. Total earnings for these companies are up +13.1% from the same period last year on +7.6% higher revenues, with 77.8% beating EPS estimates and 64.7% beating revenue estimates.
We have more than 450 companies on deck to report results this week, including 127 index members. The week's lineup includes, besides the aforementioned Amazon and Alphabet reports, a representative cross-section of bellwether operators, including Disney, Palantir, Pfizer, Eli Lilly, AMD, Chipotle, Uber, Qualcomm, Ralph Lauren, and others.
Earnings and revenue growth rates remain strong and accelerating, but the EPS and revenue beats percentages are on the weak side.
The Earnings Big Picture
Estimates have actually modestly increased for 10 of the 16 Zacks sectors since the start of January, including Tech, Basic Materials, Autos, Industrials, Transportation, and others. On the negative side, estimates have come down for 6 of the 16 Zacks sectors, including Energy, Medical, Consumer Discretionary, and others.
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>>Taking Stock of the Q4 Earnings Season
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.