Related
news
Shares Magazine
Six of the so-called ‘Magnificent Seven’ are set to report their earnings between the last week of January and the first week of February. Combined these companies add up to a combined $17 trillion of market valuation – or around 30% of the entire value of the US market’s flagship S&P 500 index.
The mood music feels like it has already shifted from the excitement stage characterised by investors cheering on every increase in AI infrastructure spending to a more sober assessment of tangible progress in productivity.
Specifically, investors and analysts will be looking for the emergence of new AI use cases and revenue streams or clear signs that AI is lowering costs and increasing corporate profit margins.
Corporate adoption has been slower than expected, reflecting lengthy pilot testing and integration challenges as businesses grapple with new ways to work.
This contrasts sharply with the consumer space where OpenAI’s ChatGPT has garnering more than 900 million weekly users and Google-owner Alphabet’s Gemini has notching up more than 650 million monthly users.
Although even here the penetration rate of paid subscriptions has been relatively muted at less than 5% of total users.
What’s already in the numbers?
It’s worth pointing out that outlook statements from the big technology firms will be just as revealing as the quarterly numbers themselves. Currently, analysts are projecting mid-teens percentage earnings growth for fiscal 2026.
This is consistent with the broader technology sector which is expected to lead earnings growth across the S&P 500 universe with investment research firm Zacks forecasting 17.4% sector growth in 2026.
Microsoft is probably the purest way to get access to the AI revolution due to its enterprise software dominance, role as the second largest cloud operator and OpenAI stake.
Investors will be looking for continued strong growth in Microsoft’s Azure cloud division after the company raised projections for capital expenditures in 2026 to a range of $140 billion to $160 billion.
There will be a focus on how quickly large corporate clients are adopting Microsoft’s AI assistant Copilot across its enterprise suite of products including Excel, PowerPoint and Outlook.
Apple is the largest technology company to report in early 2026 and the second biggest constituent of the S&P 500 with a market value of just over $4 trillion. Analysts believe 2026 could be a pivotal as the iPhone maker reveals its AI strategy.
There have been reports that the company is considering using Google’s Gemini for cloud-based AI generative features. Initiatives could include charging a premium fee of $10 to $20 per month for advanced ‘Apple Intelligence’ features, integrated into the high-margin services segment.
Another area of potential monetisation is a revenue sharing arrangement from third party AI apps sitting in the IOS (iPhone operating system) ecosystem.
While revenues from services are becoming a more meaningful part Apple’s business at around a quarter of overall sales, the iPhone remains the company’s largest revenue generator.
Strong demand for the recently launched iPhone 17 is expected to drive double-digit growth in revenues over the important holiday period to the end of December 2025.
What should investors expect from Tesla?
As ever with EV maker Tesla, the quarterly numbers will probably take a back seat to the long-term outlook as the Elon Musk-run company strives to shift the investment narrative towards FSD (fully self-driving vehicles) and human robotics.
Consensus forecasts are pencilling in a significant decline in earnings per share from the prior year reflecting continued margin pressure from price cuts amid rising competition.
Any signs that gross margins for the automaker are stabilising should be taken positively by investors.
Tesla’s energy generation and storage division is expected to see continued steady growth with a ramp-up in volumes for the Megapack 3 in expected in 2026.
A major catalyst to watch for is the approval and potential roll-out of Tesla’s robotaxi in key markets including Europe, although regulatory hurdles remain.
In short, analysts will be looking for Musk to prove that heavy investments in AI and the transition to FSD and robotics are gaining traction.
Martin Gamble: Shares and Markets Writer
Martin Gamble is Shares and Markets writer at AJ Bell. He was previously the Education Editor of Shares Magazine. He has been with the business since 2019.
Martin graduated from the University of Kent in...
