It’s a big week in the earnings season, with four of the “Magnificent Seven” – Microsoft, Meta, Tesla & Apple – reporting their financial results this week. These tech titans are some of the biggest members of the main US stock indices: S&P 500 and Nasdaq 100. The four stocks make up 16% of the S&P 500 and just over 23% of the Nasdaq 100. That means the market’s reaction to their announcements could cause volatility in the entire US stock market, and even markets around the world.
Interestingly, megacap tech companies have in recent months gone from market darlings to relative laggards, with only a couple (Nvidia and Alphabet) beating the benchmark S&P 500, while the rest have trailed as investors question rich valuations and massive AI capex. This rotation reflects a broader shift toward cheaper, more cyclical and smaller‑cap names, as markets demand clearer proof that big‑tech’s huge AI and data‑centre spending will translate into durable earnings growth rather than just headlines.
Three of the “Mag 7” – Microsoft, Meta & Tesla – report after US markets close on Wednesday, January 28. When markets reopen on Thursday, options markets predict Microsoft could move +/-4.6%, Meta could move +/- 5.8% and Tesla could move +/-4.6%. The key question for Microsoft is whether we are still in an AI boom or is it just now an AI bill. Investors need to watch Azure growth and demand for Copilot/AI tools, but also whether all this data‑centre spending is starting to squeeze, or finally boost, profit margins and cash flow. If the software giant shows strong AI revenue and stable margins, it reinforces the whole “AI is real, not hype” trade across tech. The stock recently hit an eight-month low below $440.
For Meta, it will likely be a case that ads are on fire and capex still on steroids. Strong advertising revenue is expected, but the key is how much Meta plans to spend on AI data centres and Reality Labs in 2026, and whether that still lines up with profit growth. Certainly, a capex shock could spook growth investors, but a big beat and guidance with disciplined spending is positive and should take the stock above the 200-day moving average.
Elon Musk’s Tesla is now less about EVs today, and much more about robotaxis and robots tomorrow. Markets care if car demand and margins stabilise after price cuts, but the share price reaction will hinge on how credible the autonomy / robotaxi story looks in the guidance. If Musk can’t back the AI/autonomy pitch with numbers or timelines, the market may start valuing the company more like a normal car maker. The stock recently hit record highs just below $500 in December.
Apple reports after US markets close on Thursday, January 29, and options markets predict a +/- 3.7% move when the market reopens on Friday. Investors will want to see solid iPhone demand, especially in China, and continued steady growth in high‑margin Services and AI to prove the firm can keep compounding even if hardware is choppy. Any surprise weakness in iPhones or a slowdown in Services would hit sentiment across “quality defensives” and consumer‑tech more broadly.
Across all four megacaps, the big test is whether AI and Big Tech are still a “spend now, profit later” story, or whether 2026 guidance finally shows clear margin and cash‑flow payback. If several names beat but guide cautiously, expect more rotation under the surface (into value, small caps, cyclicals) even if the indices stay near the highs.