Wall Street is upbeat on tech megacaps, but big questions loom on AI spending, China, Trump tariffs

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Mark Zuckerberg, CEO of Meta Platforms Inc.; from left, Lauren Sanchez; Jeff Bezos, founder of Amazon.com Inc.; Sundar Pichai, CEO of Alphabet Inc.; and Elon Musk, CEO of Tesla Inc., during the 60th presidential inauguration in the rotunda of the U.S. Capitol in Washington, D.C., on Jan. 20, 2025.
Julia Demaree Nikhinson | Bloomberg | Getty Images
As Alphabet and Tesla get set to kick off the tech industry's second-quarter earnings blitz on Wednesday, Wall Street appears to be feeling good.
The Nasdaq closed at a record on Monday, notching its sixth straight day in the green, and is now up 8% for the year after a rocky first quarter.
But what happens over the next 10 days will likely determine whether the rally has legs. Following Wednesday's earnings announcements, the rest of the megacaps issue results next week, except for Nvidia , which should report in late August. Meta and Microsoft report earnings next Wednesday, with Amazon and Apple set to follow a day later.
Last reporting period, investors worried about the strain of hefty tariffs on technology businesses and on whether big gambles on artificial intelligence would lead to returns for shareholders, or were signs of an inflating bubble.
Three months later, stocks have bounced back, but the the industry is still grappling with the fallout from President Donald Trump's erratic global tariff policies and uncertainty over where duties on imports will ultimately land. Apple, Amazon and Alphabet all warned in the prior quarter that strained relationships with trading partners could weigh on profits, hurting product sales and ad spending.
And the AI market has only gotten crazier, as tech companies show their willingness to pay astronomical sums for talent in addition to the tens of billions of dollars they're spending on infrastructure and model development. Meta's Mark Zuckerberg shocked the market in June, shelling out more than $14 billion to hire Scale AI CEO CEO Alexandr Wang and a few of his top staffers as part of an investment into the nine-year-old startup.
Here's what investors will be closely following from the tech giants as earnings season commences.
Alphabet
Google CEO Sundar Pichai addresses the crowd during Google's annual I/O developers conference in Mountain View, California on May 20, 2025.
Camille Cohen | AFP | Getty Images
Alphabet 's dominant online ad business took a big hit earlier this year as worries mounted that Trump's tariff plans could crimp spending. Those fears haven't subsided.
Revenue growth is expected to come in at 11%, according to LSEG, which would be the slowest rate of expansion for any period in two years. Alphabet shares have just turned positive for the year, still significantly lagging behind the Nasdaq.
Last quarter, Alphabet narrowly beat estimates and fell short on YouTube revenue. Its chief business officer also said trade policies would "cause a slight headwind" to the company's ads business, primarily from retailers based in the Asia-Pacific region.
Analysts have suggested of late that the business may be back on an upswing, thanks in part to advances in AI. Deutsche Bank analysts noted acceleration in the second quarter, while analysts at Goldman Sachs said the company's search business is in the "midst of a multi-year transformation."
BMO Capital Markets analysts echoed that sentiment, writing in a recent note that return on ad spend (ROAS) should be improving.
"As AI monetization continues to evolve, we believe Google will increasingly leverage its over twenty years of AI initiatives to continue expanding ROAS for its advertisers." the analysts wrote.
Cloud revenue remains another key focus for shareholders eager to see how AI tools are boosting a unit that's trying to keep pace with Amazon Web Services and Microsoft Azure. Earlier this year, Alphabet said it would shell out $75 billion to beef up its data centers underpinning its AI and cloud business.
Then there's the Waymo business, which has been a major source of investment for years. The robotaxi service now operates in five major U.S. cities and its vehicles had driven more than 100 million miles without a human driver or supervisor on board as of July 15. Tesla
US President Donald Trump, right, and Elon Musk, chief executive officer of Tesla Inc., during a news conference in the Oval Office of the White House in Washington, DC, US, on Friday, May 30, 2025.
Francis Chung | Bloomberg | Getty Images
Tesla remains the biggest laggard in the group, with its stock down about 17% this year heading into Wednesday's earnings report after the bell.
Earlier this month, Tesla reported a 14% year-over-year drop in second-quarter deliveries, marking a second straight quarterly decline.
Automotive revenue in the first quarter fell 20%, and analysts are expecting a similar slide for the second quarter. Tesla is battling competition from Chinese and other EV makers that are offering cheaper alternatives.
With Tesla, the story always revolves heavily around CEO Elon Musk. This earnings call will be the first since Musk's public split with President Trump. After spending over $250 million to help propel Trump back to the White House, Musk in May ended his stint as a special government employee leading Trump's Department of Government Efficiency (DOGE), only to initiate a spat with the president over the multitrillion-dollar spending package he endorsed.
Some investors may tune into the call to hear if Musk has anything to say regarding his current plan to build a new political party in the U.S. But most will be focused on the company's fundamentals and the many challenges it currently faces in trying to revitalize its EV sales. Tesla has long promised an affordable new EV model that could help it fend off the competition.
Another big topic will likely be Tesla's robotaxi efforts after the company launched a limited driverless ride-hail service in Austin, Texas last month. While the Tesla Robotaxi rollout was seen by fans as a positive sign for the company, Bank of America analysts say it has "immaterial financial ramifications." Meta
Mark Zuckerberg, chief executive officer of Meta Platforms Inc., during the Meta Connect event on Wednesday, Sept. 25, 2024.
Bloomberg | Bloomberg | Getty Images
Zuckerberg's AI spending spree has raised a lot of eyebrows.
In addition to the hiring of Wang from Scale AI, Meta also brought on former GitHub CEO Nat Friedman and his investing partner Daniel Gross, who had been CEO of AI startup Safe Superintelligence.
Zuckerberg later announced the creation of Meta Superintelligence Labs, led by Wang and Friedman. And Meta's CEO said last week that he plans to invest "hundreds of billions of dollars" into AI compute infrastructure, with plans to bring its first supercluster online next year.
Last quarter, Meta upped its full-year capital expenditures outlook to between $64 billion and $72 billion from between $60 billion and $65 billion to reflect more data center investments in AI and potentially higher hardware costs.
The pressure is on Zuckerberg to show results, or at least offer a clear strategy that investors can support.
"While the recent talent hires and focus in this area are notable — and we expect meaningful improvements in models and user-facing applications — the road to platform leadership in AI remains long and highly competitive," analysts at MoffettNathanson wrote in a recent report.
Analysts at Bank of America said they view Zuckerberg's latest commentary as "sign of confidence" in the strength of the company's business.
Meta is expected to report revenue growth of 14.5% for the second quarter, according to analysts surveyed by LSEG, which would be the slowest growth rate since mid-2023, and Wall Street projects deceleration over the next two quarters.
The Bank of America analysts wrote that Meta needs to "make a case for strong AI returns to drive multiple expansion." Microsoft
Microsoft Chairman and Chief Executive Officer Satya Nadella speaks during the Microsoft Build conference opening keynote in Seattle, Washington on May 19, 2025.
Jason Redmond | Afp | Getty Images
Azure remains the focal point at Microsoft. It's the business that sparked CEO Satya Nadella's turnaround of the software maker over a decade ago, and is key to its ambitions in AI, where Microsoft has a tight but tense relationship with OpenAI.
Microsoft's stock hit a record last week and is now up 20% for the year, about even with Meta and just behind Nvidia, which is the best performer this year among the megacaps. With a market cap of $3.8 trillion, Microsoft is firmly the second-largest company by value, trailing only Nvidia in that category as well.
Analysts still see plenty of strength in Azure. However, Mizuho told clients about "one larger workload repatriation" during the quarter, which means the return to a physical data center. BMO analysts cited input from experts, who said President Trump's DOGE effort has "made it more difficult to close Fed deals."
Amy Hood, Microsoft's finance chief, said in April that she expects 34% to 35% quarterly revenue growth for the current period from Azure and other cloud services. The growth rate was 35% last quarter.
For Microsoft, which started its new fiscal year on July 1, investors also await fresh spending guidance.
The consensus among analysts polled by Visible Alpha is about $99 billion. That would represent growth of 14%, compared with 56% expansion in the last fiscal year. Hood said in April that capital spending growth will slow.
The company has already made cost-cutting strides this month, axing about 9,000 employees in its latest round of layoffs. Analysts surveyed by Visible Alpha see about $73 billion in operating expenses in Microsoft's fiscal 2026, which implies 11% growth. Apple
Apple CEO Tim Cook speaks during Apple's annual World Wide Developers Conference at the company's headquarters in Cupertino, California, U.S., June 9, 2025.
Laure Andrillon | Reuters
Apple's biggest market may be the U.S., but the iPhone maker relies heavily on China and other Asian countries for parts and manufacturing for some of its most significant products.
The company was one of the clearest losers from Trump's aggressive tariff agenda, which threatened to hamper global trade and hike the costs of selling products in the U.S. Apple shares have tumbled about 15% this year.
Investors want more clarity on the company's strategy from here. In recent weeks, Trump has also held talks with India and Vietnam, where Apple has shifted some production in recent years.
Revenue is expected to increase about 4% from a year earlier, according to LSEG, roughly inline with recent performance. Over the past four quarters, annual growth has ranged from 2% to 6%.
Apple refrained from offering guidance last quarter, but CEO Tim Cook said the company was expecting an additional $900 million in costs for the period that ended in June. That was barring any changes to Trump's original tariff plans.
The president lauded the company this year for its commitment to invest in U.S. manufacturing. Last week, Apple announced a $500 million deal with MP Materials to beef up manufacturing of rare earth materials in the U.S. Amazon
Amazon CEO Andy Jassy speaks at a company event in New York on Feb. 26, 2025.
Michael Nagle | Bloomberg | Getty Images
Amazon's second-quarter results will offer fresh clues into how the e-commerce and cloud computing giant is navigating tariff uncertainty.
Last quarter, Amazon forecast operating profit for the current period that was weaker than Wall Street anticipated. It called out "tariffs and trade policies," currency fluctuations and "recessionary fears" as factors that may affect its results.
Investors were spooked by the guidance, despite reassurances from CEO Andy Jassy that Amazon is well positioned to weather the levies and could even take share from competitors, given its ability to offer low prices.
Amazon said the company and many of its third-party sellers stocked up on inventory in anticipation of the tariffs. But once that inventory is sold through, new shipments from China and other countries could face higher import costs.
Cloud growth is another major point of focus for Amazon shareholders. Revenue at AWS grew 17% in the first quarter, which was below analysts' estimates and the slowest growth in a year. Analysts are projecting about the same year-over-year growth for the second period.
Jassy said in May that the cloud business was constrained by data center capacity limits around power and components like AI chips.
"As fast as we actually put the capacity in, it's being consumed," Jassy told investors. He added that the company expects some of the constraints to ease up "as the year proceeds."
Amazon shares are up about 4% this year.
— CNBC's Jennifer Elias, Annie Palmer, Jordan Novet, Jonathan Vanian, Lora Kolodny and Kif Leswing contributed reporting.
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