With Big Tech earnings rolling in this week, Wall Street is watching more than just bottom lines it’s gauging how far industry giants are willing to push into artificial intelligence. Even as AI spending passes the $300 billion mark across Microsoft, Meta, Amazon, and Alphabet this year, analysts say some players still aren’t leaning in hard enough.
Following lukewarm investor reaction to Alphabet’s otherwise solid earnings last week, attention now turns to Microsoft and Meta, which report on Wednesday, and Apple and Amazon, due Thursday. For these companies, the financial results may matter less than their tone on future AI strategy especially as questions mount about where the next breakthrough will come from.
Meta’s Moonshot Moment
For Meta Platforms Inc. (META), the narrative is increasingly about ambition. Analysts at Benchmark say CEO Mark Zuckerberg’s vision to invest “hundreds of billions of dollars” into a so-called “superintelligence” network signals the start of a new chapter one that places Meta in direct competition with frontier AI labs like OpenAI and Google DeepMind.
While Meta’s AI investments have mostly bolstered its advertising infrastructure to date, Wall Street wants to see a pivot beyond the ad model. Benchmark analysts argue the company needs to get bolder in riskier, less monetized domains like autonomous research, multimodal AI, hardware development, and video generation.
“With that said, Meta must now broaden its investment scope outside advertising into more competitive and less certain return horizons,” they noted. In short: it’s time to play offense.
Apple Urged to Break Pattern
Apple Inc. (AAPL) may be known for its polished execution and conservative approach to innovation but that’s precisely the problem, analysts say. The company has faced criticism for being slow to integrate generative AI deeply into its hardware and ecosystem, even as rivals race ahead.
“Tim Cook and his team are likely to be rewarded for thinking bolder to accelerate Apple’s AI push, even if they have to step out of their comfort zone,” analysts at Melius Research wrote last week.
Apple is expected to highlight its recent AI enhancements to iOS and Siri, but analysts warn that incremental updates won’t be enough. Wall Street wants vision and a willingness to take calculated risks.
Microsoft: Cloud, Layoffs, and OpenAI Tensions
Microsoft Corp. (MSFT), arguably the current AI frontrunner, heads into earnings with high expectations, particularly for its Azure cloud business. UBS analyst Karl Keirstead estimates AI workloads contributed around 22% of Azure revenue this quarter a figure likely to grow in future quarters.
Still, challenges remain. Thousands of layoffs earlier this year have raised eyebrows, and reports of behind-the-scenes friction with OpenAI in which Microsoft has invested billions are starting to get louder.
“The consensus default view on this is essentially, ‘I have no idea how this will all turn out, but I trust Microsoft,’” Keirstead said. That trust may need reinforcement on the earnings call.
Amazon: Cloud Watch and E-Commerce Caution
For Amazon.com Inc. (AMZN), all eyes are on Amazon Web Services (AWS). After recent constraints on computing power, analysts are watching closely to see whether AWS can deliver both capacity and innovation. BofA analysts say the cloud outlook will be the key driver of post-earnings stock movement.
Meanwhile, Amazon’s e-commerce segment continues to show strength, but management’s third-quarter profit forecast may remain cautious, especially with tariff concerns lingering.
The Tariff Shadow
Speaking of tariffs, their ripple effects continue to shape corporate strategy. General Motors said last week that tariffs have already cost it $1.1 billion. And while JPMorgan Chase recently described the U.S. economy as “resilient,” analysts warn the full tariff impact may not be felt until after the Aug. 1 trade deal deadline.
Consumer hesitation is showing up in places beyond tech. Domino’s Pizza and Mattel both highlighted uncertain demand, while Chipotle cut its outlook despite strong seasonal sales.
Consumers Want Innovation, Not Just Affordability
“Consumers need a reason to go and spend,” said Kevin McCarthy of Neuberger Berman. “It needs to be compelling value. It needs to be innovation. It needs to be some element of newness.”
That sentiment could prove pivotal for Big Tech. While the average net profit margin for S&P 500 companies this quarter stands at 12.3% slightly down from last quarter but above the five-year average the real test will be how companies communicate future growth stories, particularly those driven by AI.
Earnings Blitz: Who Else to Watch
A total of 164 S&P 500 companies report earnings this week, including nine Dow 30 names. Among them:
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Visa, Mastercard, and PayPal: Will offer detailed insight into consumer spending.
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Etsy, eBay, and VF Corp: Indicate the health of discretionary retail.
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Mondelez, Kraft Heinz, and Procter & Gamble: Test the pulse of the grocery aisle.
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Coinbase and Robinhood: Reveal how much appetite remains for retail investing.
Also notable: Starbucks reports Tuesday. After slipping foot traffic and union pushback, the company’s focus on streamlining operations and reviving the in-store experience faces a key test. According to Placer.ai, Starbucks’ year-over-year foot traffic dipped 0.1% last quarter a concerning metric for a brand aiming to reconnect with younger consumers.
The Bottom Line
As the AI arms race intensifies, Big Tech is already spending big. But spending alone isn’t the full story. Analysts, investors, and increasingly, consumers, are looking for boldness — not just balance sheets.
This week’s earnings may set the tone not only for Big Tech’s next quarter, but for how the AI revolution plays out in 2025 and beyond.
