Gotrade News - Four of the biggest names on Wall Street report earnings this week, and the mood going in is tense. Microsoft (MSFT) and Meta go first, right after Wednesday's close. Amazon (AMZN) and Apple follow a day later, after Thursday's close. What's changed is what investors actually want to hear. Until recently, spending big on AI was enough to get a stock rewarded. Now the market wants to see that money come back as profit. And the sums are staggering: Fortune reports the four companies, plus Alphabet, are on course to spend roughly $724 billion on capex in 2026, a figure that could push toward $950 billion in 2027.
Why Alphabet's Slide Set the Tone
To understand the nerves, look at what happened to Alphabet last week. The company lifted its 2026 capex guidance to as much as $205 billion. Then, per Fortune, came the number that spooked people: free cash flow turned negative in the second quarter, the first time that's happened since Alphabet's 2004 IPO, even with Google Cloud revenue up 82% year over year. Investors did not take it well. The stock dropped more than 7% in its worst session in over a year and pulled the Magnificent Seven down 4.8% with it.
That reaction sets up the question hanging over every earnings call this week. "People are really focused on capex, obsessed with it," Jason Lemire of Bold Wealth Partners told Fortune. "It used to be the more the better, but now it is the less the better." Willy Lee of Neostellar Capital expects investors to keep digging: "We're going to see scrutiny on all parts of their businesses as they keep spending." The companies feeling that pressure most are the ones betting hardest on AI infrastructure. Meta (META) sits near the top of that list, with a capex line set to grow again this year.
None of this is because the numbers are bad. They're actually excellent. Forbes, citing FactSet, puts blended second-quarter earnings growth for the S&P 500 at 37.9% year over year. That's well ahead of the 23.3% analysts penciled in when the quarter began, and 86% of companies have beaten estimates. Forecasts for the full year sit at 27.3% growth, cooling to 15.3% in 2027. So why the anxiety? Because, as Forbes puts it, Wall Street wants proof that all this AI spending turns into high-margin returns, not just a bill that keeps climbing.
What to Watch in Each Report
Here's what analysts are really looking for on Wednesday night. FX Leaders expects Microsoft to post earnings per share of $4.24, up about 15% from a year ago, on revenue of $87.7 billion. The line everyone will zero in on is Azure, guided to 39% to 40% constant-currency growth, with capex running above $190 billion for fiscal 2026. Meta is pegged at EPS of $7.23 on revenue of $60.26 billion, a 27% jump year over year, and its full-year capex guidance of $125 billion to $145 billion will get read closely.
Thursday brings Apple and Amazon. Apple is projected to report EPS of $1.88 on revenue of $110.0 billion, with Services expected to set a record somewhere near $31 billion to $32 billion and plenty of attention on iPhone 17 sales. Amazon is seen at EPS of $1.82, up from $1.68 a year earlier, on revenue of $196.7 billion. As with Microsoft, the questions will center on cloud growth at AWS and whether capex, now pacing above $200 billion, is paying off.
One thing worth noting before the reports land: these names are not entering the week on equal footing. Fortune points out that Microsoft is down 21% year to date and Meta has slipped 9.8%, while Apple is up 23% over the same stretch. In other words, the market has already baked plenty of doubt into the two biggest AI spenders. That sets a high bar for whatever Microsoft says about Azure and the cloud. Apple, up on the year, is being judged on a different question: whether its Services business can keep growing.
If you're a retail investor, don't get too hung up on whether any single company beats by a penny. What matters more is the tone management strikes on returns. If Azure and AWS keep growing and margins hold up despite the spending, the market may calm down about capex. But if guidance disappoints next to those huge spending numbers, Alphabet just showed how fast sentiment can flip. And there isn't much of a safety net right now. The S&P 500 is coming off a quarter of better-than-expected profits, so expectations are already high. Any sign that AI investment is running ahead of the payoff could reset how investors value this whole group heading into the second half.
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