Key facts
- Investors are scrutinizing Big Tech earnings for AI return on investment.
- Microsoft and Meta face pressure to justify capital expenditures.
- Options markets anticipate significant stock swings for Microsoft and Meta.
- Apple's earnings call may be Tim Cook's last as CEO.
- Apple's earnings will focus on AI strategy, memory costs, and iPhone 18 pricing.
- US stocks fell on Wednesday.
- The Federal Reserve held interest rates steady.
- Oil prices jumped over 4% due to Middle East tensions.
- Chip stocks SK Hynix and Samsung Electronics experienced significant drops.
- The S&P 500 has struggled since its June peak.
- Other market segments have shown strength beyond the 'Magnificent Seven'.
Investors are intensely scrutinizing upcoming Big Tech earnings reports, with a significant focus on demonstrating tangible returns on Artificial Intelligence (AI) investments. Companies like Microsoft and Meta are under particular pressure to justify their substantial capital expenditures in AI. The options market anticipates considerable volatility for both Microsoft and Meta stocks. Apple's earnings call, potentially the final one for CEO Tim Cook, will also be a key event. Investors will be looking for details on Apple's AI strategy, the impact of rising memory costs, and pricing considerations for the upcoming iPhone 18. Analyst sentiment on Apple's stock is divided, with some foreseeing potential gains from new programs and services, while others express concerns about margin pressures. The broader US stock market experienced a decline on Wednesday as the Federal Reserve decided to maintain interest rates at their current levels. Concurrently, oil prices saw a notable increase of over 4%, driven by escalating tensions in the Middle East. Chip stocks faced downward pressure in anticipation of the Big Tech earnings season, with SK Hynix and Samsung Electronics recording significant price drops. The S&P 500 has faced challenges since its peak in June, with the performance of the "Magnificent Seven" megacap stocks lagging. However, other segments of the market have exhibited resilience, suggesting a potential broadening of the bull market. This trend will be further tested by the upcoming earnings reports from these major technology companies.