Can strong earnings from Apple and Microsoft reverse their underperformance?
Strong results from Apple and Microsoft could mark a turning point if they deliver clear beats on both earnings per share and revenues relative to forecasts. The consensus estimates for Apple (about USD 2.65 EPS on USD 137.5 B revenue) and Microsoft (about USD 3.88–USD 3.93 EPS on ~USD 80.2 B) reflect modest year-over-year growth and positive revision trends, which suggests analysts expect resilience in core businesses, including iPhone demand and cloud growth. If both companies beat expectations and give confident forward guidance, this may restore some investor confidence and contribute to relative performance improvement versus the broader market.
Does Meta need upside surprises to regain investor confidence?
Meta’s stock has been under pressure since its last earnings release and is trading at a valuation discount to some other mega-caps. Recent commentary indicates that the market is particularly focused on advertising revenue trends, AI investment costs and capital allocation clarity. Because sentiment remains cautious and the stock’s relative strength metrics have declined, a positive surprise—particularly on margins, ad revenue growth or cost discipline—would likely be important to reverse the recent underperformance and attract renewed investor interest. Without some form of upside surprise or clearer execution on strategic initiatives, sentiment may remain muted.
Broader context
The “Magnificent 7” group has lagged the broader market recently, in part due to valuation recalibration and sector rotation into non-tech stocks. The earnings expectations for this cycle incorporate modest growth but still represent a meaningful test of execution and future outlook narratives. If Apple and Microsoft outperform and provide constructive guidance, this could help narrow the valuation gap. However, in the absence of stronger forward signals—especially on AI monetisation and sustainable growth—investor caution may persist.
In summary, strong results from Apple and Microsoft could help reverse their recent relative underperformance, but Meta likely needs an upside surprise relative to its consensus expectations to materially shift investor confidence. Performance outcomes and management commentary in the earnings calls will be key drivers of sentiment in the days following reporting.
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