MW More Big Tech names report this week amid AI spending spree. Wall Street still wants some to leave their 'comfort zone.'

By Bill Peters

Earnings Watch: Results due from Microsoft, Meta, Apple and Amazon, as some analysts say more boldness is required to compete on AI. Starbucks also reports

Big Tech is already hundreds of billions of dollars deep into artificial intelligence. Even amid worries about an AI bubble, it is likely to get deeper this year. But as more big industry names report this week, Wall Street says some of them still need to get even more aggressive, as the AI race accelerates.

Microsoft Corp. and Facebook parent Meta Platforms Inc. report quarterly results on Wednesday. Apple Inc. and Amazon.com Inc. report on Thursday. Those reports will follow decent results from Alphabet Inc. $(GOOG.UK)$ (GOOGL) last week that were nonetheless met with a shrug from investors.

For Meta (META), Benchmark analysts say Chief Executive Mark Zuckerberg's plans to invest "hundreds of billions of dollars" to build out a "superintelligence" network, as well as its efforts to shell out more cash for engineering talent, would "certainly be topical" on the social-media giant's earnings call. The moves, the analysts said, meant it was officially "game on for direct competition with OpenAI, Google, and other frontier AI labs."

Still, they noted, much of Meta's investments in AI have focused on expanding and strengthening its advertising platform, which drives sales. And as the AI race plows ahead, they said Meta would have to get more aggressive.

"With that said, Meta must now broaden its investment scope outside advertising into more competitive and less certain return horizons including autonomous research, video generation, hardware innovation, multimodal AI, and Agentic AI systems," they said.

Apple $(AAPL)$, meanwhile, has faced concerns about not incorporating AI deeply enough into its devices, and falling behind its rivals in developing the technology. Melius Research analysts last week said the iPhone maker could also stand to take more chances and embrace uncertainty.

"Tim Cook and his team are likely to be rewarded for thinking bolder to accelerate Apple's AI push, even if they have to step out of their comfort zone," they said.

Elsewhere, UBS analyst Karl Keirstead, in a research note last week, said Microsoft $(MSFT.UK)$ faced high growth expectations for its Azure cloud business, as businesses stay conservative on IT spending and new projects remain on hold but managers nonetheless show signs of shaking off their deepest worries about tariffs. He estimated that around 22% of Azure revenues during the quarter would come from AI workloads.

He said there are also questions about the thousands of layoffs this year at the company. Then, there are the reports on friction between Microsoft and OpenAI - the ChatGPT developer which has received billions in investments from Microsoft - amid efforts to renegotiate the terms of their partnership.

"The consensus default view on this is essentially 'I have no idea how this will all turn out but I trust Microsoft,'" Keirstead wrote.

BofA analysts said that for Amazon, the outlook for its large cloud business would be a key driver for post-earnings stock action, following constraints on computing-power capacity. And while they expected strong trends in its massive e-commerce segment, they said to the company's profit outlook for the third quarter could stay conservative.

Four companies alone - Microsoft, Meta, Amazon and Alphabet - are set to spend more than $300 billion on the technology this year, according to reports. That spending has arrived as consumers overall remain cautious over higher costs of living and the potential hit from tariffs.

JPMorgan Chase & Co. (JPM) this month said the economy was "resilient." But it might take time for the full impact of tariffs to show up in corporate financials and consumer receipts, as nations try to work out trade deals with the U.S. before an Aug. 1 deadline, and as companies try to offset the costs.

Still, while worries over those higher costs persist, S&P 500 companies so far this earnings season have reported a net profit margin of 12.3%, according to FactSet. That's a bit below the prior quarter, but above the average seen over past five years.

But some results still point to consumer hesitation.

Toy maker Mattel Inc. $(MAT.AU)$ showed more clarity around tariffs and its ability to cushion the blow, although its quarterly results were mixed, as retailers hold off on orders. Domino's Pizza Inc. $(DPZ)$ still faces questions about growth in the U.S. next year, RBC analysts said, amid competition from local pizzerias.

Meanwhile, Chipotle Mexican Grill Inc. $(CMG.AU)$ called out the popularity of its Honey Chicken limited-time menu item. But didn't appear to do much for its outlook, which the company cut. But while it warned of slipping consumer confidence, it also said stronger sales trends emerged through the summer.

Kevin McCarthy, an analyst at the investment firm Neuberger Berman, said that some consumers still had the capacity to spend. Willingness, he said, was a different matter.

"Consumers need a reason to go and spend," he said. "It needs to be compelling value. It needs to be innovation. It needs to be some element of newness."

This week in earnings

According to FactSet, 164 S&P 500 companies, including nine Dow 30 members, report quarterly results this week.

Highlights include Visa Inc. (V), Mastercard Inc. $(MA)$ and PayPal Holdings Inc. (PYPL), which will offer deeper details on consumer spending trends. Results from Whirlpool Inc. $(WHR.UK)$, Etsy Inc. $(ETSY)$, eBay Inc. $(EBAY)$, Steven Madden (SHOO), and Vans parent VF Corp. (VFC) will lend more insight into how much people are still willing to spend on home-renovation projects and their wardrobes, as well as how smaller businesses are faring amid the trade-war limbo.

Boeing Co. (BA) also reports, as some analysts start to see more positive signs from the beleaguered jet-maker. And as the food industry weighs retrenching and consumers stay picky, a number of companies that sell grocery-aisle staples report this week - Oreo maker Mondelez International (MDLZ), Hershey Co. (HSY), Kellanova (K), Clorox Co. $(CLX.UK)$ and Procter & Gamble Co. $(PG)$. Kraft Heinz Co. $(KHC)$ also issues results, as it reportedly weighs a breakup.

Elsewhere, earnings are due from Robinhood Markets Inc. (HOOD) and Coinbase Global Inc. (COIN) UnitedHealth Group Inc. (UNH), Merck & Co Inc. $(MRK.UK)$, Electronic Arts Inc. (EA), JetBlue Airways Corp. (JBLU), CVS Health Corp. $(CVS.AU)$, Roku Inc. (ROKU), Spotify Technology SA. (SPOT), Reddit Inc. (RDDT), Wingstop Inc. $(WING.UK)$ and Shake Shack Inc. (SHAK)

The calls to put on your calendar

Transportation and supply chains: Reports from Ford Motor Co. (F) and Harley-Davidson Inc. (HOG) will offer an update on their tariff anxieties, after General Motors last week said those import taxes had cost it $1.1 billion. United Parcel Service Inc. (UPS) and rail operator Norfolk Southern Corp. $(NSC.AU)$ also report, following concerns about the trade war's impact on supply chains and already-muted shipping demand, as well as the prospect of a merger between Norfolk and Union Pacific Corp. (UNP). UPS and Norfolk Southern report Tuesday. Ford and Harley report on Wednesday.

The number to watch

Starbucks Corp. sales, margins: Coffee chain Starbucks Corp. is trying to bring back customers with friendlier vibes, simpler menus, a cleaner order and pickup process, more staffing and more hours. In April, Starbucks executives said efforts to get back to coffee-shop basics were working. But unionized employees have complained of understaffing, and foot traffic at the company, which reports Tuesday, slipped 0.1% year over year during the second quarter, according to analytics firm Placer.ai, as competition steers customers elsewhere.

McCarthy, at Neuberger Berman, also said that as coffee and energy drinks converge, younger generations have split from older ones, for whom hanging out at a coffee shop once carried a bit more cultural significance. Then, there are the other things that come with hanging out at coffee shops, namely everyone else there, their coffee-shop etiquette or lack thereof, and the conversations - about politics or anything else - that you might overhear.

"Coffee itself tries to bring people together," he said. "And if people don't like each other, or they have different opinions, it casts a shadow over that experience."

-Bill Peters

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July 27, 2025 10:00 ET (14:00 GMT)

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