Big Tech Earnings Preview: Microsoft, Meta, Amazon & Apple
The upcoming earnings season for mega-cap tech companies is expected to feature mixed results and guidance around their core businesses. The management commentary on their outlook will be crucial as the market assesses the impact of tariffs. A significant question looming over these tech giants is whether cloud service providers will continue their substantial capital expenditure (CapEx) growth in FY 2025.
The strong growth in investing in technology infrastructure to support generative AI (GAI) has been a focus over the past year and is projected to expand this year. While the projected OpEx growth has decreased, the much stronger pace of expected CapEx to support AI technology infrastructure has raised concerns as the significant ramp in spending is projected to grow faster than revenues.
Microsoft
According to Visible Alpha consensus, Microsoft’s total revenues for Q3 are expected to decline to $68.5 billion from $70.1 billion last fall. However, the new Azure AI Services segment is projected to remain solid, with consensus estimates expecting $10.8 billion for FY2025. Microsoft’s FY 2025 CapEx numbers have continued to increase steadily since 2019, with estimates climbing over $18 billion from $44.5 billion in FY 2024 to $63.6 billion in FY 2025.
Meta Platforms
Meta Platforms is expected to report total revenues of $41.3 billion for Q1, driven by solid performance in the Family of Apps segment. Operating profit is expected to be $15.5 billion, driven by resilience in the Family of Apps and consensus losses of $4.5 billion for Reality Labs. Meta’s CapEx guidance of $60-$65 billion was above the consensus of $50.7 billion in Q4, raising questions about whether this high level of CapEx will be maintained in 2025.
Amazon
Amazon guided to Q1 revenue of $151-155.5 billion, below the consensus of $158.6 billion. The company’s North America segment is projected to generate $416.6 billion in revenue. AWS delivered mixed results last quarter, with consensus expecting $29.4 billion in revenue with an operating profit margin of 35% for Q1. Amazon’s CapEx is expected to increase further in FY 2025 to $105 billion, up significantly from $52 billion in 2023.
Apple
Apple’s total revenues of $94.3 billion for Q2 are expected, driven by $45.7 billion from iPhone. Greater China expectations have remained stable since last quarter at $15.9 billion for Q2. However, overall full-year iPhone revenue expectations have been moving down since last year, suggesting increased pessimism about the potential upgrade cycle and the impact of tariffs.
The earnings releases from these tech giants will be closely watched for their outlook on AI, CapEx spending, and the impact of tariffs on their businesses. The market will be looking for signs of whether these companies will maintain their current level of investment in technology infrastructure and how it might affect their future growth.
