What we learned from Meta, Microsoft, Amazon and Apple’s latest results

Big US technology companies are back in the news after the latest set of earnings reports. Four of the ‘Magnificent Seven’ have just updated the market and all of them have smashed expectations with their quarterly numbers. However, not everyone enjoyed a positive share price reaction.

Meta was the standout name in terms of smashing market expectations, while Microsoft’s well-received figures took its valuation beyond the $4 trillion mark for the first time.

There was a common theme throughout the results – AI and big spending to support the technology. This isn’t a new theme, yet what’s changed is the strength of earnings to help justify that spend.

The big tech companies generate significant amounts of cash that not only pays for technology investments, but also funds share buybacks and dividends.

Investors last year expressed concern about the amount of money spent on AI-related infrastructure and whether these big tech firms would earn a decent return on that investment. These companies have given reassuring messages for now – but it’s an area to watch closely going forward.

Meta

• Share price movement on day of results: +11.3% (31 July 2025)

Meta’s second quarter results had a profound impact on investors, sending its shares soaring.

Earnings exceeded expectations by 22%, which is quite a feat. It’s even more impressive when you consider the Facebook and Instagram owner has beaten earnings forecasts by 10 quarters in a row.

Meta is riding high from digital advertising. Companies around the world know the power of its social media networks as channels by which to reach a large audience.

Its algorithms are second to none, embracing AI to help serve up relevant content to keep users engaged and feed them with advertisements that match their tastes and interests.

The significant amount of cash generated from carrying advertisements allows Meta to indulge in its more speculative metaverse dreams while also spending big to further strengthen AI capabilities. This is fine for now, but problems could arise if the advertising taps are turned off.

History suggests that companies quickly scale back advertising during gloomier economic conditions. That means Meta needs to make hay while the sun shines.

Microsoft

• Share price movement on day of results: +4% (31 July 2025)

Microsoft has now beaten earnings for five quarters in a row, and the latest results helped drive up the company’s valuation to more than $4 trillion. It reported 17% revenue growth to $76.4 billion and 22% growth in net income to $27.2 billion, both on a constant currency basis.

Its cloud computing operations are going from strength to strength, while the personal computing operations continues to show resilience and gaming activity is picking up. If you drill down into the individual business units, there’s progress across the board.

The Azure cloud arm was the biggest driver for revenue growth, up 39% year-on-year. This is a network of Microsoft-managed datacentres that let businesses to run their computing needs remotely rather than on their premises.

Hosting services in the cloud is now widespread practice for businesses and Microsoft has taken advantage of this dependency on its infrastructure to offer additional services like building AI applications.

Amazon

• Share price movement on day of results: -6.6% (1 August 2025, pre-market trading)

Amazon’s shares fell 6.6% in pre-market trading as investors found things to worry about and forward profit guidance was less than expected. 

First, it is spending big on AI and investors want more clarity on this strategy. Competition remains fierce for cloud computing services and Amazon’s sales growth rate is struggling to match rivals Microsoft and Alphabet.

The retail side of its business is caught up in Trump’s spiderweb of tariffs, which creates ongoing uncertainty.

The retail arm looked resilient in the past quarter, yet there is a fear among investors that sales might have benefited from Amazon encouraging suppliers to stock up on goods in the US before new tariffs came into power, which should have kept a lid on prices. Once stocks are run down, the next wave of goods could become more expensive if tariffs are passed onto the customer.

There’s already some nervousness in the market around US consumer spending – while activity increased in June, inflation also picked up. Investors are concerned that consumer spending growth rates may now start to slow.

Apple

• Share price movement on day of results: +2.4% (1 August 2025, pre-market trading)

Overall earnings were better than expected, meaning Apple has now beaten forecasts in nine out of the past 10 quarters. Importantly, iPhone sales have started to improve in China following a period in the doldrums amid fierce competition from local players. Showing it can fight back in China could have been the catalyst for a share price rally, but investors were unable to shake off uncertainty around tariffs.

Most iPhones sold in the US originate from India, which means Apple is in the firing line for tariffs. These phones are not cheap in the first place, but they could become even pricier if the tariff costs feed through to the end user. That puts a big question mark over future demand rates and gives investors something to keep worrying about.

Apple is already having to contend with a structural shift in the market where fewer people upgrade mobile phones on a regular basis. That means it is having to rely more on bells and whistles to convince people they need the latest technology.

The latest iPhones have more sophisticated camera features and longer battery life, and Apple is playing catch-up with AI features. Unfortunately for Apple, there are other companies going down the same path, including Alphabet-owned Google, whose Pixel phones are growing in popularity.