Apple, Microsoft, Meta, Alphabet and Amazon are part of Zacks Earnings Preview

Zacks Equity Research
7 min read

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For Immediate Release

Chicago, IL – November 4, 2024 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Apple AAPL, Microsoft MSFT, Meta META, Alphabet GOOGL and Amazon AMZN.

Breaking Down Mag 7 Earnings Results

Of the six members of 'The Magnificent 7' group of stocks that have reported September-quarter results already, the market didn't like three – Apple, Microsoft and Meta – but loved the Teslareport and liked what it saw from Alphabet and Amazon.

The group ceded its market leadership role a few months back, and these mixed results can be interpreted to mean that the trend is now here to stay. In other words, the group's unambiguous market leadership of last year and early this year is now firmly behind us.

I want to push back on part of this narrative, as most Mag 7 stocks provide some of the most sustainable growth performances in the entire market.

Aside from Apple, which is likely no longer a growth company, the other Mag 7 companies are not only generating impressive top- and bottom-line growth today, but the trend is expected to remain in place at least through next year, if not beyond.

Take the case of Apple, which beat consensus estimates and whose Q3 earnings increased +8.8% from the year-earlier level to almost $25 billion on +6.1% higher revenues of nearly $95 billion. Apple may no longer command the growth pace of its peers like Amazon, Alphabet, or Meta, but it enjoys a degree of market dominance that is hard to dislodge by its competitors, let alone start-ups.

Microsoft's Q3 earnings were up +10.7% on +16% higher revenues, while Meta's earnings increased +35.4% on +18.9% revenue growth. Both companies beat top- and bottom-line consensus estimates.

If one was nitpicking the results from these two companies, then signs of deceleration in Microsoft's cloud revenues and Meta's advertising revenues would be the only operating issues here. Is that the issue in the Microsoft and Meta reports, or is there something else at play?

The answer to that question lies in what Microsoft and Meta are doing to prepare for the artificial intelligence (AI) world. Each of them is heavily investing in building AI infrastructure, and the amounts involved are massive and bigger than many in the markets had been expecting.

In fact, Microsoft and Meta are hardly alone in this boat, as Alphabet and Amazon are spending as heavily on AI infrastructure as these two.

In fact, Apple is the lone laggard in this regard, though it has started talking more about the AI capabilities embedded in its coming software upgrades that will require users to have the newest iPhones. However, we should remember that unlike Apple, which is solely a consumer-facing operator whose AI functionalities will be targeted at consumers, the other Mag 7 players primarily target businesses with their AI offerings.

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