As major tech companies prepare to release their quarterly earnings, the market is on edge due to escalating trade tensions. Previously, investors were optimistic about economic growth, but now concerns about tariffs potentially leading to a recession have overshadowed enthusiasm for AI investments. Safe-haven assets like gold have become popular as investors remain cautious.
This week, Microsoft, Apple (AAPL, Financial), Meta Platforms, and Amazon will report their earnings, representing nearly 20% of the S&P 500's total weight. Analysts expect a 15% average profit growth for these companies by 2025, a forecast unchanged despite trade uncertainties. However, any earnings miss could lead to further sell-offs, given the current market anxiety.
Last week, Tesla reported disappointing results, but CEO Elon Musk's focus on the company was welcomed. Alphabet exceeded expectations but offered little future guidance. The Bloomberg "Magnificent Seven" index rose by 9.1% last week, yet is still down 15% this year.
Investors will scrutinize spending plans, especially with Microsoft halting some data center projects, suggesting a reassessment of expenditures. Apple's vulnerability to tariffs might be offset by increased demand from consumers purchasing ahead of price hikes. Amazon's e-commerce and advertising segments face tariff risks, but its high-margin web services could cushion impacts.
Given economic uncertainties, executives are unlikely to provide reliable forecasts. Despite these challenges, tech giants' strong market positions and balance sheets might help them withstand downturns, making them attractive to bargain hunters if trade tensions ease.
