Weekly Equities Forecast: Magnificent 7 earnings Meta, Apple & Tesla

Mega cap tech earnings will kick off next week with cloud computing growth, AI applications, profit margins, and regulations in focus.

Big tech has been a key driver of the stock market rally, and strong earnings could set a positive tone for the year ahead.

Five of the seven magnificent 7 companies will report this week.

January 29th, Microsoft, Tesla  & Meta

January 30th Apple

February 4th Alphabet

February 6th Amazon

February 26th Nvidia

Investors will see if these tech behemoths bring the fundamentals to support valuations. The average share price gains of the Magnificent 7 jumped 60% in 2024. Given the outsized market caps, these stocks greatly influence the market cap-weighted Nasdaq 100 and S&P 500. Therefore, the earnings impact is often seen in the indices as well as the individual share price

AI focus

Investors will be keen to see how AI investments have been paying off in terms of revenue and growth and what AI investments will look like this year.

Big Tech’s capex was significantly larger than expected in 2024, and 2025 will likely follow suit. This may not be a problem if the extra expense results in revenue and profit growth.

Meta Q4 earnings preview

Meta will release Q4 earnings after the close on Wednesday. Wall Street is expecting EPS of $6.73, up 23% from last year, and revenue to rise 17.2% to $47 billion.

Meta has set itself apart from other tech giants by focusing on enhancing its products with AI to drive higher ad revenue rather than its peers, which focus on cloud capabilities. However, this is expensive, and Meta CEO Mark Zuckerberg said he is willing to spend; however, investors are more cautious.

Meta announced that it would spend as much as $65 billion on AI infrastructure this year in a bid to boost its position against rivals such as OpenAI and Google. The Facebook owner will increase hiring for AI roles and build a +2 gigawatt centre.

Attention will also be on how management thinks about changes in its content moderation policy.

How to trade META earnings?

Meta trades within a rising channel and hit an ATH on Friday at 652. Buyers supported by the RSI above 50 will look to extend the bullish run towards the 700 round number and 775, the upper band of the rising channel. Support can be seen around 550, the December 2024 low.

Apple Q1 earnings preview

Apple reports earnings on Thursday after the close. The numbers come as the company's share price is down 10% so far this year, making it the worst performer in the Dow Jones index.

Concerns over the company losing market share in China and its AI offerings compared to peers have weighed on the share price.

Meanwhile, the company’s service sector, which was also key to its last evaluation, should be strong. Apple is expected to report fiscal Q1 earnings of $2.43, up 11.5% year over year, on revenue of $124. 1 billion.

There's a growing expectation that Apple could deliver lower-than-forecast financial guidance for its fiscal second quarter. The tech giant has been grappling with sluggish demand for its iPhones in China amid increasing competition from players like Huawei.

According to Bloomberg, Apple's flagship hand iPhone16 handset sales fell by 18.2% in the December quarter in China, and global iPhone sales slipped by 5% during the critical holiday period. A key concern and issue for Apple have been its limited availability of new AI features in China, and it has yet to finalize a partnership with domestic players such as Tencent Baidu.

Several breakages have downgraded the stock in recent days and weeks

How to trade AAPL earnings

Apple ran into resistance at a record high of 259 at the end of 2024. The shooting star bearish reversal pattern saw the price drop lower, and it is testing support around 220, the November low.

Sellers, supported by momentum, will look to take out 220 support to open the door to 213, the 50% fib retracement from the 164 2024 low to the 159 2024 high. Below here, 202c comes into play.

On the upside, resistance can be seen at 237, the 23.6% Fib retracement level.

Tesla Q4 earnings

Tesla is due to release Q4 earnings on January 29th after the market closes. This could be a litmus test for the recent rally, as Tesla shares have jumped sharply since the presidential election.

Deliveries in 2024 fell short of expectations. The EV maker reported a year-over-year fall in deliveries, a first for the company.

The earnings release will also be a test of the stock rally after the share prices jumped 95% over the past year.

Expectations are for Tesla's Q4 revenue to rise 7.8% compared to the same quarter a year ago, while its EPS is set to rise by 12.8% to $0.64.

However, full-year earnings are expected to fall 20% to $2.48, which could mark the second straight year in which the EV maker has posted an average 20% annual profit fall.

Margins will be under the spotlight after the company slashed vehicle prices to boost deliveries, and 2025 delivery guidance could grow by as much as 30%.

How to trade TSLA earnings

Tesla broke out from its triangle pattern, surging to a record high of 486. The price has since corrected lower, finding support at 375, the 2022 high. The price now hovers above the 23.6% Fib retracement of the 2024 low and 2024 high.

Buyers will look to extend the recovery back towards 486 and to fresh record highs.

Sellers would need to break below 375 to create a lower low and test 355 the 38.2% Fib retracement.