If Big Tech earnings deliver, the bull run gets fresh legs
It's tempting to call this a pause for breath—but make no mistake, what follows could determine whether bulls stay in control.
With 59 S&P 500 companies already reporting and a staggering 86% surpassing estimates, according to FactSet's latest, the bar being set is high. It's a message: optimism is winning, but only if it endures.
ADVERTISEMENT
The spotlight now turns to the elite of the elite: Alphabet and Tesla. These two giants, part of the so-called 'Magnificent Seven,' are poised to set the tempo. FactSet forecasts these mega-caps will deliver about 14% year-on-year growth, dwarfing the modest 3.4% gain expected from the remaining 493 S&P members. If they execute, markets could ride that booster straight into orbit.
Look at Alphabet first. Here's a conglomerate that dominates search, YouTube, cloud, and is now making serious AI inroads. Analysts expect around 15% growth in earnings, with cloud revenue expanding in double digits. That's robust by any standard.
However, the test will lie in translating AI investment into sustained profit, and avoiding regulatory traps that could dampen its shine.
Then there's Tesla, which is a polarizing force in the EV and tech arenas. Yes, deliveries are down about 13.5% year-over-year, and earnings are estimated to fall roughly 19–20%, with EPS north of $0.40.
But Elon Musk is doubling down, reportedly sleeping in the office, laser-focused on robotaxi and tech updates. If he delivers on those fronts, sentiment could swing sharply positive, even if top-line figures remind investors of lumpiness in the core auto business.
This is why this phase of earnings feels nothing like a routine check-in. We're perched on a razor's edge: confirmation that growth remains intact—or the first sign that valuations teeter on thin air.
The S&P's forward P/E sits around 22.2, higher than its five- and 10-year norms of 19.9 and 18.4, respectively. That's a premium tied to performance. With 19 quarters of revenue growth already behind us, it's time for proof that earnings can keep pace.
The message from the banks so far paints a picture: financials and healthcare are lifting earnings, while sectors like energy are lagging. But if Alphabet or Tesla stumble, it could offset gains and invite a broader reassessment. Conversely, if they deliver, and perhaps outperform, this rally gains fresh legs.
Why is this crucial? Because the backdrop remains complex. Tariff chatter, Fed policy shifts, geopolitical worries, they're all still in play. But right now, the market isn't fixated on macro headlines. It's banking on this micro foundation: corporate earnings. A strong season builds confidence that transcends volatility.
It's about narrative, too. When the S&P hits new heights just as earnings season begins, there's a constancy in the story. It's not just that the market is high, it's that earnings are expected to follow suit. Beat expectations, and that narrative deepens; miss them, and the rally becomes vulnerable to challenges.
So, here's where we stand: the Opening Act is strong. Momentum is palpable. But what matters most is what happens next. Can the Magnificent Seven deliver? Will Alphabet stave off AI disruption and regulatory spanners? Can Tesla quell concerns about shrinking deliveries and keep investor passion alive through its tech ambition?
Their answers will echo far beyond their own results; they'll shape how investors view the entire S&P.
So buckle up. This week's script will write the next chapter in the bull story. No one wants to see forceful resistance here. The market's high ambitions demand high execution. If that comes, the journey upward continues.
Nigel Green is deVere CEO and Founder
Also published on Medium.
Notice an issue? Arabian Post strives to deliver the most accurate and reliable information to its readers. If you believe you have identified an error or inconsistency in this article, please don't hesitate to contact our editorial team at editor[at]thearabianpost[dot]com. We are committed to promptly addressing any concerns and ensuring the highest level of journalistic integrity.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Gulf Today
a day ago
- Gulf Today
Wall Street, dollar firm ahead of a big week for market risk
Wall Street and the dollar firmed on Friday as investors girded themselves for the week ahead, which includes a Federal Reserve policy meeting, crucial corporate results and US President Donald Trump's August 1 deadline for negotiating trade deals. 'Some deals will be done and talks will continue, and Trump may push out the deadline further,' said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. 'Trump's process is to shock and then be reasonable in terms of tariffs.' All three indexes were modestly green in early trading, and were on course for weekly gains. Gold lost some shine, pressured by the dollar as healthy risk appetites lured investors away from the safe-haven metal. With Trump's negotiating deadline just a week away, the US and its trading partners are scrambling to reach trade agreements, with European negotiators heartened by the deal with Japan announced on Tuesday. Intel's shares INTC.O dropped 8.8% after the chipmaker forecast steeper-than-expected quarterly losses and said it had halted or scrapped new factory projects in the US and Europe. More than a third of the companies in the S&P 500 have posted results, 80% of which have beaten estimates, according to LSEG data. Analysts now expect year-on-year second-quarter earnings growth of 7.7%, compared with the 5.8% estimate as of July 1. Four members of the Magnificent 7 group of Artificial Intelligence-related megacap stocks - Amazon, Apple , Meta and Microsoft are on next week's earnings docket, and market participants will scrutinize the companies' conference calls for signs that AI expenditures are beginning to pay off and whether tariff-related uncertainties continue to weigh on forward guidance. US economic data released on Friday showed an unexpected decline in new orders for core capital goods, as companies hold back on big ticket purchases amid the fog of ongoing trade talks. The Fed is expected to convene next week for its two-day monetary policy meeting, which is expected to culminate in a decision to let its federal funds target rate stand in the 4.25% to 4.50% range. The meeting comes at a moment in which Fed Chair Jerome Powell is facing criticism from Trump for not cutting rates. 'I don't expect Powell to change what he does, nor should he,' Ghriskey added. 'The idea of lower interest rates should scare us because Fed has had this huge job of bringing down inflation, and to ease rates at this point is clearly going to be inflationary.' The Dow Jones Industrial Average rose 113.54 points, or 0.25%, to 44,806.30, the S&P 500 rose 16.19 points, or 0.26%, to 6,379.67 and the Nasdaq Composite rose 44.40 points, or 0.21%, to 21,102.36. European shares gave back some of the previous session's gains as market participants parsed mixed corporate earnings and awaited developments in the U.S.-EU trade negotiations. MSCI's gauge of stocks across the globe fell 1.01 points, or 0.11%, to 940.34. The pan-European STOXX 600 index fell 0.29%, while Europe's broad FTSEurofirst 300 index fell 5.34 points, or 0.24%. Emerging market stocks fell 10.36 points, or 0.82%, to 1,256.93. MSCI's broadest index of Asia-Pacific shares outside Japan closed lower by 0.95%, to 661.07, while Japan's Nikkei fell 370.11 points, or 0.88%, to 41,456.23. US Treasury yields drifted higher in a subdued trading as investors braced for a data-heavy week, updates on US trade talks, and a Federal Reserve policy meeting. The yield on benchmark US 10-year notes rose 0.2 basis points to 4.41%, from 4.408% late on Thursday. The 30-year bond yield rose 0.5 basis points to 4.9543% from 4.949% late on Thursday. The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 0.6 basis points to 3.919%, from 3.925% late on Thursday. The dollar gained strength but remained on course for its biggest drop in a month as investors focused on tariff negotiations and central bank meetings on the calendar for next week. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.28% to 97.72, with the euro down 0.2% at $1.173. Against the Japanese yen, the dollar strengthened 0.4% to 147.57. In cryptocurrencies, bitcoin fell 3.08% to $115,133.22. Ethereum declined 2.63% to $3,641.43. Oil prices softened as investors mulled the global demand outlook and a potential supply increase from Venezuela. US crude fell 0.56% to $65.63 a barrel and Brent fell to $68.91 per barrel, down 0.39% on the day. Gold prices dropped in opposition to the firming dollar, amid growing optimism surrounding U.S.-EU trade talks. Spot gold fell 0.93% to $3,336.52 an ounce. US gold futures fell 0.85% to $3,342.50 an ounce. Canada's main stock index edged higher on Friday, led by technology shares, even as US President Donald Trump suggested the United States may not reach a negotiated trade deal with Canada. The benchmark S&P/TSX Composite Index rose 0.2% to 27,427.78 points, remaining on track for a modest weekly gain. Trump said on Friday that the United States may not reach a trade agreement with Canada, hinting his administration could set a tariff rate unilaterally. Agencies
Al Etihad
a day ago
- Al Etihad
China proposes global AI cooperation organisation
26 July 2025 08:42 SHANGHAI (REUTERS)Chinese Premier Li Qiang on Saturday proposed establishing an organisation to foster global cooperation on artificial intelligence, calling on countries to coordinate on the development and security of the fast-evolving at the opening of the annual World Artificial Intelligence Conference (WAIC) in Shanghai, Li called AI a new engine for growth, but adding that governance is fragmented and emphasising the need for more coordination between countries to form a globally recognised framework for three-day event brings together industry leaders and policymakers at a time of escalating technological competition between China and the United States - the world's two largest economies - with AI emerging as a key battleground."Currently, overall global AI governance is still fragmented. Countries have great differences particularly in terms of areas such as regulatory concepts, institutional rules," Li said."We should strengthen coordination to form a global AI governance framework that has broad consensus as soon as possible," he has imposed export restrictions on advanced technology to China, including the most high-end AI chips made by companies such as Nvidia and chipmaking equipment. Despite these restrictions, China has continued making AI warned that AI could become an "exclusive game" for a few countries and companies, and said challenges included an insufficient supply of AI chips and restrictions on talent exchange. China wanted to share its development experience and products with other countries, especially those in the Global South, he is an annual government-sponsored event in Shanghai that typically attracts major industry players, government officials, researchers and investors. Tesla CEO Elon Musk has in past years regularly appeared at the opening ceremony but did not speak this than 800 companies are participating, showcasing more than 3,000 high-tech products, 40 large language models, 50 AI-powered devices and 60 intelligent robots, according to organisers. The exhibition features many Chinese companies, including tech giants Huawei and Alibaba and startups such as humanoid robot maker Unitree. Western participants include Tesla, Alphabet and Amazon.
Arabian Post
a day ago
- Arabian Post
Tesla set to unveil Robotaxis in San Francisco this weekend
Tesla has accelerated its plans for the launch of its highly anticipated Robotaxi service in San Francisco, with the service potentially set to begin as early as this Friday. The announcement comes after the company moved up its timeline, reflecting confidence in its self-driving technology and its ability to meet regulatory requirements. Some Tesla owners have already been notified that they will have the opportunity to participate in this groundbreaking service. The Robotaxi service will utilise fully autonomous vehicles designed to operate without human intervention. Tesla's ambitious push into the autonomous transport market marks a significant milestone in the development of self-driving technology, a space that has seen increasing competition from both established automakers and technology companies. Unlike traditional ride-hailing services, such as Uber and Lyft, Tesla's Robotaxi network promises a fully autonomous experience, offering an entirely driverless ride to passengers. This initiative is a critical step for Tesla as it continues to integrate its electric vehicle lineup with cutting-edge artificial intelligence. Tesla's CEO, Elon Musk, has long spoken about the company's ability to transform the transport industry, and the launch of Robotaxis is seen as one of the cornerstones of Tesla's future vision for mobility. The project has garnered considerable attention from the tech and automotive industries, with many viewing it as a test of whether fully autonomous systems can operate safely and efficiently in complex urban environments. ADVERTISEMENT The roll-out in San Francisco represents the first phase of a broader plan to deploy the service across multiple cities in the coming years. Tesla's decision to launch in a city known for its challenging driving conditions—marked by dense traffic, varied road infrastructure, and diverse weather conditions—demonstrates the company's readiness to test its technology in real-world, high-stakes environments. Tesla's self-driving technology has faced its share of scrutiny, particularly after several high-profile incidents involving its vehicles' autonomous systems. However, the company has consistently iterated on its software and hardware, aiming to resolve any shortcomings that have raised concerns among regulators and the public. Tesla has worked closely with the California Department of Motor Vehicles to ensure compliance with state regulations regarding autonomous vehicles, and this partnership has been a key factor in expediting the service's approval process. The company's move to launch a driverless taxi service is not just about technology; it also aims to address a number of environmental and economic challenges. By relying on electric vehicles, Tesla is positioning its Robotaxi fleet as a greener alternative to traditional gasoline-powered taxis. The company has made significant strides in lowering the cost of electric vehicles, and this latest service could make clean energy-driven transportation more accessible to the masses. Despite the optimism surrounding the launch, there are still many questions to be answered about the broader viability of autonomous taxi services. For one, the long-term economic implications remain unclear. While Tesla's vision of a fleet of self-driving cars that operate autonomously holds great potential, the cost of scaling such a service will likely be high, especially in the early stages. Additionally, concerns regarding safety, insurance, and public acceptance of fully autonomous vehicles continue to linger. Tesla is also facing stiff competition from other tech giants, including Waymo, Cruise, and Aurora, all of whom are also pushing forward with their own autonomous driving initiatives. These companies are each vying for a slice of the autonomous vehicle market, which is expected to be worth billions in the coming decades. ADVERTISEMENT As Tesla prepares to roll out its Robotaxi service, the company is placing significant emphasis on the AI and machine learning capabilities embedded in its vehicles. The company has designed its AI systems to continuously learn and adapt to new driving scenarios, improving the vehicles' decision-making processes over time. Tesla's use of over-the-air updates allows it to rapidly roll out improvements and safety features to its autonomous fleet, an advantage that other companies in the field lack. The launch of Tesla's Robotaxi service will also be a defining moment for the public's perception of autonomous vehicles. While some consumers are eager to embrace self-driving technology, others remain wary, concerned about safety, control, and the potential loss of jobs in industries reliant on human drivers. Tesla's ability to prove the safety and reliability of its autonomous fleet will be crucial in gaining consumer trust and widespread adoption of the service.
