Abu Dhabi, United Arab Emirates: This week marks one of the most consequential earnings periods of the year, with Amazon, Meta, Alphabet and Microsoft reporting on Thursday, followed by Apple on Friday. Together, these five companies account for nearly a quarter of the S&P 500, positioning their results as a key driver of broader market direction.

At the centre of attention is artificial intelligence. Collectively, these companies are expected to spend close to US$700 billion this year to fuel growth, but investor focus is shifting decisively from the scale of investment to the returns it can generate. This earnings cycle represents the first meaningful test of whether the AI trade can continue to justify elevated valuations.

Amazon remains a focal point, having outperformed peers year-to-date. AWS growth is expected to re-accelerate to around 28% in the first quarter, with full-year growth potentially approaching 36% as additional capacity comes online. The company has already flagged a US$15 billion AI revenue run rate within AWS, reinforcing confidence in demand.

However, capital expenditure remains the key risk. Amazon is expected to reiterate its US$200 billion capex outlook for 2026 — the largest in corporate history. While the business remains relatively efficient compared to other hyperscalers, rising investment has weighed on free cash flow. Any signs of stabilisation or improvement will be critical in shifting sentiment towards capital discipline.

Josh Gilbert, Market Analyst at eToro, commented: “This is the first real stress test for the AI trade. Markets have been willing to support massive investment, but now investors want to see clear returns. Growth, margins and cash flow all need to start moving in the right direction.”

Meta’s investment case is more straightforward, with its core advertising business continuing to fund its AI expansion. First-quarter revenue is expected to rise approximately 33% year-on-year to US$56 billion, with forward guidance pointing to continued strength. AI is already contributing to monetisation, improving both ad targeting and content ranking.

Recent results underline this trend, with Family of Apps ad revenue rising 24% year-on-year, supported by higher ad impressions and pricing. With capital expenditure expected to increase roughly 70% to US$126 billion this year, investors will be looking for continued evidence that AI-driven gains are scaling alongside spend.

Alphabet’s results will offer further insight into the balance between investment and returns. Google Cloud is expected to grow around 50% in the first quarter, supported by strong demand for AI infrastructure and key partnerships, including its multi-year agreement with Anthropic. This deal is emerging as a significant driver of compute demand.

Total revenue is forecast at US$107 billion, with Search remaining a core contributor. However, margin pressure remains a concern as Alphabet transitions towards a more capital-intensive model. The extent to which cloud growth offsets this pressure will be central to market reaction.

Microsoft enters the week under greater scrutiny following recent share price weakness. Azure growth is expected to remain robust at around 38%, while total revenue is forecast at US$81 billion. As an early leader in AI through its partnership with OpenAI, Microsoft now faces increasing competition, prompting a reassessment of its positioning.

Investor focus will centre on Azure performance and enterprise adoption of Copilot. Strong execution in these areas could reinforce confidence in its AI strategy, while any disappointment may amplify concerns around rising costs and competitive pressures.

Apple stands apart from its peers, with less immediate exposure to the current AI investment cycle. However, it continues to deliver strong underlying performance. Revenue for the quarter is expected to reach US$109.7 billion, driven by sustained iPhone demand, particularly in China, alongside continued growth in Services.

The company’s substantial cash generation provides flexibility to invest in AI at its own pace. Attention will turn to the upcoming Siri upgrade, which represents an early test of its AI roadmap. Execution here could set the tone ahead of its next iPhone cycle, while any delays may extend investor uncertainty around its long-term AI strategy.

Media Contact:
PR@etoro.com

About eToro:

eToro is the trading and investing platform that empowers you to invest, share and learn. We were founded in 2007 with the vision of a world where everyone can trade and invest in a simple and transparent way. Today we have 40 million registered users from 75 countries. We believe there is power in shared knowledge and that we can become more successful by investing together. So we’ve created a collaborative investment community designed to provide you with the tools you need to grow your knowledge and wealth. On eToro, you can hold a range of traditional and innovative assets and choose how you invest: trade directly, invest in a portfolio, or copy other investors. You can visit our media centre here for our latest news.