As Big Tech companies prepare to reveal their quarterly results in the coming weeks, the artificial-intelligence trade is heading toward a critical juncture.

The “Magnificent Seven” had established a reputation as clear market winners, but that narrative has faltered so far this year — with investors chasing the momentum in cyclical, small-cap and international plays. This earnings season will test the durability of those megacap tech names as the market broadens beyond just a handful of winners.

Microsoft, Meta Platforms and Tesla are all set to report next Wednesday, Jan. 28. Apple will report earnings the following day, on Jan. 29.

Wall Street has high hopes for two Big Tech names, in particular: Apple and Google parent Alphabet.

Earlier this month, the two companies entered a partnership for Apple to license Google’s Gemini technology for the next generation of its Siri assistant. Bank of America analyst Wamsi Mohan believes Apple’s use of Gemini will be a key step in advancing the iPhone maker’s AI strategy. “Running AI on end-user devices can help Apple stand out in a very competitive smartphone market,” Wamsi wrote in a January note.

That partnership will have a further-out impact on Apple’s business — but there are reasons to be optimistic about the here and now, as well. Evercore ISI analyst Amit Daryanani opened a tactical outperform rating on Apple in a note this week, as he believes the upcoming earnings report will be a catalyst for shares. Evercore’s channel checks and industry research points to a stronger-than-expected iPhone product cycle, Daryanani wrote. He expects iPhone revenues to be up 17% year over year this quarter, well above the 11% consensus estimate. Apple is also well insulated from recent spikes in memory costs after locking prices in long-term contracts, he added.

For Alphabet, the financial benefits of the new Apple arrangement are also yet to be realized. But the partnership is a validation of the company’s full-stack AI strategy, proving to investors that Alphabet’s infrastructure can be used both in-house and at commercial scale. 

Alphabet’s “investments look like they’re paying off in terms of the performance of their model,” Allen Bond, portfolio manager at Jensen Investment Management, told MarketWatch. The company’s vertical integration, from custom chips to a leading large language model, provides financial strength for Alphabet at a time when investors are increasingly concerned about excessive AI spending, Bond said. 

In a note this week, BNP Paribas analyst Nick Jones wrote that he anticipates continued momentum in Google’s Search and Cloud businesses when Alphabet reports earnings on Feb 4. Jones is expecting 37% growth in the Cloud business and 16% growth in Search — above Wall Street consensus estimates of 35% and 14%, respectively.

A hot play on the semiconductor boom

Although shares of Nvidia are essentially flat so far this year, enthusiasm for semiconductors hasn’t abated, with the VanEck Semiconductor ETF up 11% year to date

Bond identified the chip-equipment company KLA as a high-conviction earnings pick. The company provides solutions to manage and inspect semiconductors — and KLA “dominates its niche in the market,” which is “mission critical,” he noted. The company is also hardware agnostic, meaning that it benefits no matter which chip architecture or manufacturer gains the most traction in the market.

In a note this week, J.P. Morgan analyst Harlan Sur called KLA a top pick among semiconductor equipment companies. He cited an increase in order pull-ins — where customers request earlier-than-scheduled equipment deliveries — as a clear signal of accelerating demand for AI-related chip production.

Software diamonds in the rough

The next few weeks could also be a turning point for select software stocks, many of which have been battered recently by fears that AI could greatly disrupt their business models.

However, IBM has quietly sidestepped the recent software bloodbath and earned the bullish endorsements of both Jefferies analyst Brent Thill and Evercore’s Daryanani. Daryanani also gave IBM a tactial outperform rating this week.

After establishing a name for itself with its hardware and PC products, IBM has pivoted heavily to higher-margin software and services offerings in recent years. Software is expected to comprise nearly 50% of IBM’s total business by 2027, up from less than 40% just five years ago, Thill wrote in a Wednesday note.

The company’s ongoing cost-saving initiatives, which are projected to reach $4.5 billion in gross run-rate savings by the end of 2025, are key drivers for expanding margins and potentially delivering upside to its fourth-quarter earnings this Wednesday, Jan. 28, Daryanani believes.

Among more traditional software-as-a-service companies, ServiceNow is a top pick for David Wagner, head of equity and portfolio manager at Aptus Capital Advisors. Wagner highlights ServiceNow’s rapid expansion into customer-service management as the company scales beyond its traditional IT-service core. Jefferies analyst Samad Samana expects its non-IT services to grow to 50% or more of total new annual contract value in the next year.

In a note this week, Samana wrote that ServiceNow stock is currently oversold due to investor anxiety about its recent acquisitions of Armis and Moveworks. He expects current remaining performance obligations and subscription revenue to outperform the consensus by 50 to 100 basis points.

For fiscal-year 2026, Wall Street is looking for 18% to 18.5% organic growth. Samana said that if ServiceNow management guides toward 19% on the company’s Jan. 28 earnings call, it would drive “real enthusiasm” among buy-side investors.