AI Capex Clouds Tech Horizon, Even as Meta and Tesla Shine

• With roughly a third of companies reporting thus far, S&P 500 EPS growth for Q4 2025 currently stands at 11.9%
• This week, Alphabet, Amazon, and several consumer names take the stage as peak earnings season hits its stride
• Potential earnings surprises this week: Disney, CME Group, Take-Two Interactive, Phillips 66 and more​

Mixed Signals in the Mag 7: AI Spending Rattles Big Tech 

Headline whiplash returned to US equity markets last week, but this time the drama wasn’t geopolitical. On Thursday, the tech-heavy Nasdaq fell 1.3% as the market digested mixed results from some Magnificent Seven earnings reports. The primary weight came from Microsoft (MSFT), which saw its shares plunge nearly 12% in its worst single-day decline in six years.

While the tech behemoth handily beat expectations on the top and bottom-line, investors decided to home in on capital expenditures which totaled $37.5B for the quarter, proving that the cost of admission in the AI era is a steep one.¹ 

AI spending anxiety rippled through the broader software sector. Investors are no longer satisfied with strong current results, they are beginning to question the timeline for returns on these massive infrastructure investments. ServiceNow (NOW), despite posting an earnings beat and raising its subscription guidance, dropped 12% in sympathy.² Other cloud and enterprise stalwarts like Salesforce (CRM) and Intuit (INTU) followed suit. All major indices continued to decline on Friday. 

However, the week wasn’t a total wash for Big Tech. Meta Platforms (NASDAQ: META) surged 10% after proving that its AI investment is already bearing fruit in ad targeting³, and Tesla (NASDAQ: TSLA) managed to keep its head above water as results topped Wall Street’s expectations.⁴ Late Thursday, all eyes turned to Apple (AAPL), which reported record revenue for its fiscal first quarter, offering a defensive ballast to a shaky week. But after initially rising on those results, Apple’s stock got caught up in the broader freefall, and a warning from CEO Tim Cook about how AI data center buildouts were putting pressure on the memory chip market. That’s something that could impact the price of consumer and enterprise devices going forward.⁵ 

Q4 2025 Scorecard: Growth Perseveres Amid Narrow Leadership 

We are now roughly a third of the way through the S&P 500 reports for the Q4 2025 season, and the early results suggest a market that is resilient but increasingly demanding.

• Positive Surprises: 75% of companies have beaten EPS estimates, while 65% have beaten on the top line. While these numbers are healthy, they sit slightly below the 5- and 10-year averages, reflecting a quarter where analysts uncharacteristically raised the bar heading into the season. On a positive note, however, those companies that surpass EPS estimates are doing so by 9.1%, above both the 5 and 10-year averages.⁶
• Sector Leaders: Information Technology, Industrials and Communication Services are leading the charge in earnings growth. 
• The Laggards: Meanwhile, Consumer Discretionary, Health Care and Energy are expected to post YoY declines in EPS, while only Energy is also estimated to show a YoY revenue decline. 

Looking Ahead: The “Big Four” Capex Test and Macro Crossroads 

The volatility of late January is unlikely to subside this week. We move into the true heart of peak earnings season, with over 1,000 companies scheduled to report. The spotlight will remain on the “Big Four” AI spenders as Alphabet (GOOGL) and Amazon (AMZN) report, with investors hunting for evidence that their combined $500 billion in projected 2026 capex will translate into bottom-line growth.

Beyond the Magnificent Seven, the consumer pulse will be tested by Chipotle (CMG), Uber (UBER) and Yum! Brands (YUM) next week. These names come on the heels of a stellar Q4 report and Investor Day from Starbucks (SBUX).⁷ In an interview with CNBC, CEO Brian Niccol commented that the low consumer confidence we are seeing as measured by surveys such as the University of Michigan’s Consumer Sentiment reading isn’t matching the behavior they are seeing in stores. The coffee giant reported very good shopping behavior from every income and age cohort last quarter.⁸ These upcoming reports will be critical in determining if the S&P 500 can shake off the shivers from late last week and resume its climb toward new record highs.

Outlier Earnings Dates This Week

Academic research shows that when a company confirms a quarterly earnings date that is later than when they have historically reported, it’s typically a sign that the company will share bad news on their upcoming call, while moving a release date earlier suggests the opposite.⁹

This week we get results from a number of large companies on major indexes that have pushed their Q4 2025 earnings dates outside of their historical norms. Twelve companies within the S&P 500 confirmed outlier earnings dates for this week, nine of which are earlier than usual and therefore have positive DateBreaks Factors*. Those names are: DaVita Inc (DVA), Simon Property Group (SPG), Healthpeak Properties (DOC), The Walt Disney Company (DIS), Take-Two Interactive Software (TTWO), CME Group (CME), Equifax (EFX), Digital Realty Trust (DLR) and Ventas (VTR). The three companies with negative DateBreaks Factors this week are Teradyne Inc. (TER), Broadridge Financial Solutions (BR) and Phillips 66 (PSX).

Q4 2025 Earnings Wave 

This week marks the second peak week of Q4 earnings season with 1,348 companies expected to release results (out of our universe of 11,000+ global names). Currently, February 26 is predicted to be the most active day with 846 companies anticipated to report. Thus far, 61% of companies have confirmed their earnings date and 14% have reported. The remaining dates are estimated based on historical reporting data.

The Bottom Line

The market has entered a “show me the money” phase for AI. While the S&P 500 remains on track for its 10th consecutive quarter of growth, the margin for error has vanished. Tech remains the North Star, but as Microsoft proved this week, even a North Star can flicker if the cost of keeping it bright becomes too high.

Sources:

1 Microsoft Cloud and AI Strength Drives Second Quarter Results, January 28, 2026, https://view.officeapps.live.com
2 ServiceNow Reports Fourth Quarter and Full-Year 2025 Financial Results, January 28, 2026, https://s205.q4cdn.com
3 Meta Reports Fourth Quarter and Full Year 2025 Results, January 28, 2026, https://s21.q4cdn.com
4 Tesla Q4 and FY 2025 Update, January 28, 2026, https://assets-ir.tesla.com
5 Apple Reports First Quarter Results, January 29, 2026, https://www.apple.com
6 FactSet Earnings Insight, John Butters, January 30, 2026, https://advantage.factset.com
7 Brian Niccol opens Starbucks Investor Day with confidence in the company’s turnaround and path for long-term, sustainable growth, January 29, 2026, https://about.starbucks.com
8 “Starbucks plots the next phase of its turnaround with new drinks, loyalty program tweaks,” CNBC, Amelia Lucas, January 29, 2026, https://www.cnbc.com
9 Time Will Tell: Information in the Timing of Scheduled Earnings News, Journal of Financial and Quantitative Analysis, Eric C. So, Travis L. Johnson, Dec, 2018, https://papers.ssrn.com

Twitter: @ChristineLShort

The author may hold positions in mentioned securities.  Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.