Big tech earnings preview: Microsoft, Meta, Amazon & Apple

Earnings previews 

For the mega-cap tech companies, this earnings season is likely to be dominated by mixed results around the core businesses and guidance. In addition, the management commentary around the outlook will be critical, as the market assesses the impact of the tariffs. There is a large looming question about whether or not cloud service providers will continue with a significant capex growth in FY 2025.

The strong growth in investing in the technology infrastructure to support generative AI (GAI) has been a focus the past year and is projected to expand this year. While the projected OpEx growth has decreased, the much stronger pace of the expected CapEx to support the technology infrastructure for AI has caused some concern as the significant ramp in spending is projected to grow faster than revenues. If there is a pullback in CapEx spending by Meta (NASDAQ: META), and cloud service providers, Microsoft (NASDAQ: MSFT), Amazon (NASDAQ: AMZN), and Alphabet (NASDAQ: GOOGL) for accelerated computing to support GAI, there may be an impact on Nvidia’s (NASDAQ: NVDA) outlook.

Microsoft

According to Visible Alpha consensus, total revenues expected for Q3 have declined to $68.5 billion from $70.1 billion last fall, driven by a slightly more conservative view of its core business segments. However, the new Azure AI Services segment is projected to remain solid, with consensus estimates now expecting $10.8 billion for FY2025.  Profitability is also expected to remain resilient for the Company.

We are closely watching what the company will say about the outlook for AI and Copilot, as Microsoft’s FY 2025 CapEx numbers have continued to increase steadily since 2019. According to consensus projections, CapEx estimates have climbed over $18 billion from $44.5 billion in FY 2024 to currently $63.6 billion in FY 2025 and $71.9 billion in FY 2026, up now 5x from FY 2019.

Microsoft stock has traded down nearly 20.0% since the January earnings release and is down 2.4% since January 2024. The consensus P/E for 2025 has come down from 31x last quarter and is now 27x. Could the Q1 release and outlook drive more meaningful outperformance in the stock?

Meta Platforms

According to Visible Alpha consensus, total revenues for Q1 are expected to reach $41.3 billion, driven by solid performance in the Family of Apps segment, especially in the U.S. and Europe. 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.

For 2025, post- Q4 earnings expectations for operating income from the Family of Apps have increased over $1.0 billion to $20.0 billion for Q1, driven by higher ad revenue per DAU in the US and EU. However, the operating profit figures for the rest of the year have not changed. The management commentary on the outlook in the earnings call will be key to assessing the potential direction of revisions. In addition, the projected losses from Reality Labs for 2025 have also increased by $1.5 billion, driven by higher anticipated losses in the second half of the year.
In Q4 2024, CEO Mark Zuckerberg highlighted that the company planned to invest in servers and data centers to support AI. CapEx guidance of $60-$65 billion was above consensus of $50.7 billion in Q4. There are questions about whether or not this high level of capex will be maintained in 2025.

META stock has been down 28.4% since the Q4 release in January, but still up over 40% since January 2024. The consensus P/E for FY 2026 has come down to 17x from 25x. Will Meta remain disciplined in FY 2025 and resume its outperformance?

Amazon

The company guided to Q1 revenue of $151-155.5 billion, below the consensus of $158.6 billion, and to an operating profit of $14-18 billion, which was slightly below the $18.3 billion expected. Since the last release, Q1 and FY 2025 consensus total revenue have pulled back, given the Company’s potential exposure to tariffs.

Total revenues for FY 2025 of $694 billion have moved down almost $10 billion above consensus, driven by lower revenue expectations in North America and International retail. The North America segment is projected to generate $416.6 billion in revenue. Revenues from Advertising have seen estimates slightly decreasing since last fall.

The North American retail operating margin for FY 2025 has remained steady at 7.1% since last quarter but has seen expectations nudge down for the first three quarter and increase for the Q4 holiday selling season. This margin resilience is likely to be driven by improvement to their fulfillment network cost structure and inventory placement. The International margin is expected to remain at 3% this year but may be helped by the recent weaker dollar. Looking further out, consensus expects the North America margin to be 9.5% and the International margin to increase to 5% by the end of FY 2027.

AWS delivered mixed results last quarter. Coming into Q1, consensus is expecting $29.4 billion in revenue with an operating profit margin of 35%. For FY 2025, analysts are now expecting a 35% margin, down from 37% last year. On the upcoming earnings call, it will be interesting to hear Managment’s expectations for AWS growth and if the high demand for GAI will continue.
To support Amazon’s growing need for technology infrastructure, CapEx is expected to increase further in FY 2025. CapEx is projected to increase in 2025 to $105 billion, up significantly from $52 billion in 2023. Like Microsoft and Meta, there are questions about the continued ramp of CapEx in FY 2025 and if it will be reduced, due to the uncertain macro environment.

The stock traded down 30% since the Q4 release but is up 11.6% since January 2024. The consensus P/E for FY 2026 is 22x, down from 30x.

Apple

Based on Visible Alpha consensus, Apple Inc.’s (NASDAQ: AAPL) total revenues of $94.3 billion for Q2 are expected, driven by $45.7 billion from iPhone. While estimates have moved down since last fall, Greater China expectations have remained stable since last quarter at $15.9 billion for Q2 and $66.2 billion for the FY 2025. Overall full-year iPhone revenue expectations of $201.2 billion have been moving down since last year, suggesting increased pessimism in the market about the potential upgrade cycle and the overhang from tariffs. In addition, significant parts of Apple’s supply chain may be impacted by tariffs, which impact product margins going forward.

While iPhone sentiment has declined, expectations for the high-margin Services segment have remained stable for Q2 at $26.7 billion, enabling the estimated total operating profit to remain consistent at $29.3 billion. The gross margin for the Services segment was 75.0% last quarter and expected to dip to 74.3% this quarter. The company said that it continues to see increased customer engagement, with the Apple ecosystem supporting the future growth of the Services business. Based on consensus, Services are expected to hit $120.1 billion at the end of FY 2027, down $2 billion from the earnings release.

The stock has traded down 19.2% since the Q1 release and is up 4.7% since January 2024. The consensus P/E for FY 2026 is 24x, down from 30x last quarter.