Tech Giants Face Critical Earnings Test Amid Tariff Storm

The technology sector faces a significant week of earnings reports amid warnings of a major sentiment shock. 

While US business sentiment surged following the election at the start of the year, J.P. Morgan Research finds that uncertainty surrounding tariff increases and Trump administration policies has since depressed confidence, with direct implications for corporate spending and hiring.

“We anticipate this slide in sentiment to accelerate sharply into midyear, as a front-loaded lift in global industry fades and as the April tariff announcement weighs on business confidence broadly,” says Bruce Kasman, Chief Global Economist at J.P. Morgan.

Four of the Magnificent Seven stocks, which have collectively lost nearly US$4tn in market value since December, report earnings this week. 

Microsoft and Meta both report on Wednesday, 30 April, while Apple and Amazon will announce results on Thursday, 31 April. 

These earnings arrive during a period of market uncertainty, with the S&P 500 down more than 10% year-to-date while the tech-focused Nasdaq has declined nearly 16%.

Microsoft cloud business growth faces questions amid AI infrastructure review

Microsoft reports its third quarter earnings on Wednesday, with shares down 13% year-to-date since failing to recover from their post-Q2 results drop in January. 

The company recently announced it would be “slowing or pausing” some of its data centre projects, following a period where cloud and AI services demand grew beyond expectations. Microsoft has positioned itself to benefit from AI advancements, incorporating the technology into several of its existing products.

“In recent years, demand for our cloud and AI services grew more than we could have ever anticipated and to meet this opportunity, we began executing the largest and most ambitious infrastructure scaling project in our history,” Noelle Walsh, President of Microsoft’s Cloud Operations, says.

“Any significant new endeavor at this size and scale requires agility and refinement as we learn and grow with our customers. 

“What this means is that we are slowing or pausing some early-stage projects.”

The company’s last quarter results showed revenue of US$69.6bn, marginally ahead of consensus estimates of US$68.92bn, while earnings per share of US$3.23 beat expectations of US$3.11. 

However, cloud revenue fell short of expectations, coming in at US$40.9bn compared to estimates of US$41.1bn.

Within Azure, Microsoft’s cloud services division, demand for AI services has emerged as a growth area, attracting new clients as Microsoft competes against rivals like Amazon’s AWS.

Meta Llama 4 models provide contrast to wider tech sector concerns

Meta enters its first quarter earnings announcement on Wednesday with stronger momentum than many of its tech peers. 

The company’s Q4 results exceeded expectations with revenue of US$48.4bn versus estimates of US$46.9bn. 

For Q1, the company guided revenue between US$39.5bn and US$41.8bn, representing growth of 8% to 15% from the prior year period.

Jefferies analysts estimate Meta’s revenue will reach US$40.2bn, up 10% year-on-year, with earnings per share of US$5.42, representing 15% growth. 

They maintained a “buy” rating with a US$600 price target, highlighting Meta's recently released Llama 4 AI models.

The Meta investment thesis draws strength from the company’s connection of more than 3.5 billion people worldwide to more than 10 million advertisers, with extensive data and targeting capabilities delivering relevant advertising to users.

Apple and Amazon face direct China tariff impact in Thursday financial reports

Both Apple and Amazon report on Thursday, with tariff concerns weighing heavily on investor sentiment for both companies.

Apple shares have dropped 20% year-to-date, with analysts revising total revenue estimates downward from US$412bn to US$407bn for fiscal year 2025. 

The company is projected to report earnings of US$1.60 per share on a diluted basis, reflecting a 4.6% increase from last year.

On 9 April, the Trump administration announced a 90-day pause on all reciprocal tariffs, except those targeting China. Trump then later stated that he expects tariffs on China to come down “substantially” from the promised levy of up to 145%. 

These tariffs present substantial concerns for Apple, potentially increasing costs for iPhones, Macs and AirPods.

Amazon faces retail and advertising risks from Chinese seller relations

Amazon’s stock has declined 21% year-to-date. 

Raymond James analysts downgraded Amazon to “outperform” from “strong buy” and reduced the price target to US$195 from US$275, citing tariff concerns. 

Approximately 30% of Amazon’s gross merchandise value is China-linked, and Chinese sellers represent roughly 15% of advertising purchases on the platform.

Amazon faces revenue and margin challenges from tariffs, particularly on Chinese imports. Key risks include higher seller costs, logistics and retail cost inflation and potential advertising spend reduction from Chinese sellers. These factors could lead to higher product prices, with some increases potentially absorbed by sellers, resulting in lower sales, reduced margins and conservative second quarter guidance.

AJ Bell analysts have connected Amazon’s recent share price movement to tariff uncertainty, noting the sharp pullback from February’s all-time high following the full-year results for 2024. 

The results had shown a record annual profit, reinforcing Amazon’s position in the race to lead and monetise the development of generative AI through its cloud-service business AWS.

Danni Hewson, Head of Financial Analysis at AJ Bell, told Yahoo Finance that tariff concerns could “help to explain the sharp pullback from what had been a new all-time high in February in the wake of the full-year results for 2024”.

She adds: “They showed a record annual profit, to help reinforce the view that Amazon was one of the frontrunners in the race to lead and monetise the development of generative AI, thanks in particular to its cloud-service business AWS, which made far more money than the US and International retail arms.”

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