Four of the ‘Magnificent Seven’ stocks have reported their latest quarterly financial results to a mixed market reaction.
Meta was the winner in share price terms, jumping 10.4% in a single session after impressing investors with revenue growth and business success. Microsoft was the loser, down 10% in a day amid a slowdown in cloud computing growth.
Here are the key takeaways from the results, which also included figures from Tesla and Apple. All the companies reported after the market close, so any mention of the share price rection reaction refers the following trading day.
Tesla goes big on robots
Tesla reported a drop in annual sales and adjusted earnings, leading to a 3.5% decline in its share price.
Struggles around electric vehicles sales and fierce competition from China’s BYD is old news to the market. Instead, what caught investors’ attention is the implied acceleration of robot production.
The company is going to discontinue production of the Model X and Model X electric vehicles and repurpose their California manufacturing plant to produce its Optimus humanoid robots.
Tesla has designed the Optimus machines to do everyday tasks and free up humans to do more productive jobs. Think robots flipping burgers and putting out the rubbish in the near term, and in the future to potentially tutor children and walk dogs. While this is an interesting pivot for Tesla, it is another area where China is also investing heavily so competition is a major risk to consider.
While it may look like electric vehicles are taking a back seat, that is not the case. Tesla still needs this part of its business to tick over smoothly as it helps fund Musk’s robot vision, which is getting bigger by the day.
These robots use AI, and it is notable that Tesla is ploughing $2 billion into Musk’s xAI business despite a large chunk of shareholders opposing the investment.
Musk needs the electric vehicle business to stay relevant as it is a key part of the ambitious targets that dictate whether he scores the $1 trillion bonus set by Tesla. To get the full reward, he needs the business to excel at electric vehicle and robot production, self-driving subscriptions, and robotaxis in commercial use – and make big profits.
Meta impresses despite higher spending plans
Meta’s shares rallied despite signalling it would spend nearly twice as much on AI infrastructure this year than last. Helping to get investors on side were comments that AI is already helping its staff to become more productive, and that revenue is flying. Meta is also investing to develop its own chips and AI coding tools which should bring down costs over time.
Meta is a rare example of company that quickly proved the benefits of AI, having last year extolled the virtues of the technology in improving engagement rates on its social media platforms. The more people watch its social media videos and reels, the more they see advertising which lines Meta’s pockets.
The big unknown for Meta is whether its decision to start charging users a small fee to have ad-free access to its social media platforms is commercially sound. If streaming platforms are anything to go by, certain people are happy to put up with adverts for a cheaper way to use a service, so Meta will not see everyone go ad-free.
For those who pay Meta for ad-free usage, will the company receive less money through subscriptions than from advertising revenue? Meta might argue it is about giving customers choice.
Microsoft cloud growth slowdown
Microsoft did not get the hero’s welcome for its second quarter results. While revenue and earnings beat expectations, slowing cloud computing growth disappointed the market. It reported 39% year-on-year growth versus 40% three months in the previous quarter. While that is only a marginal slowdown, it was enough to spook the market.
Cloud computing is a key part of the company’s bread and butter, and investors want to see it singing from the rooftops. It is a highly competitive market and a sensitive area every time Microsoft reports.
Microsoft is pinning its future success on widespread adoption of its CoPilot AI system. There are concerns in the market that while companies and individuals increasingly have access to CoPilot, they are not using it much. It begs the question if Microsoft’s large investments in AI are worth it.
Capital expenditure increased by 66% year-on-year in its second quarter to $37.5 billion. Approximately two-thirds of that money went on chips to support the Azure cloud computing platform and AI applications.
Apple enjoys Chinese comeback
Apple’s first quarter results were significant on multiple levels. It has now beaten earnings expectations for 12 quarters in a row. More important for market sentiment longer-term is a breakthrough in China.
The tech giant has reconnected with Chinese phone users after a difficult few years amid intense competition from local handset providers. The iPhone 17 launch appears to have resonated with the public and had enough bells and whistles to lure people into upgrading their handsets.
China’s stock market also had a great run in 2025, and the country’s retail investors frequently participate in buying and selling shares. It might be that individuals made a mint on the stock market and used profits to go on a spending spree. It is no coincidence that luxury goods names like Burberry and LVMH have also recently reported a pick-up in Chinese sales.
Phone manufacturers are in the habit of launching new variations of best-selling handsets, making incremental changes to features in the hope people ditch their old device and get the new model. That worked for a while, but in recent years there has been buyers’ fatigue and users have opted to keep existing handsets for longer.
Apple makes a song and dance out of every new iPhone launch, typically promising upgrades from a menu of camera improvements, longer battery life, faster performance, shape, size, and more. The iPhone 17 ticks these boxes and for once there seems to have been enough enhancements to tip people over the edge and hit the ‘buy’ button.
While the iPhone’s success has dominated the company’s latest results, do not forget that Apple is a multi-faceted beast. Its services arm is the company’s secret sauce, providing recurring revenue and locking people into its ecosystem. This steady stream of money gives Apple options such as reinvesting in the business, funding share buybacks, and making acquisitions.
Dan Coatsworth: Head of Markets
Dan Coatsworth is AJ Bell's Head of Markets. Dan has been with the company since December 2012 and has more than 18 years' experience in the industry, following the markets and all things investing. He...
