Apple Earnings Beat Forecasts, Meta Stock Rally, Microsoft Shares Drop — Tech Earnings Update

Apple delivered record quarterly revenue and profit, driven by strong iPhone and services sales, pushing its shares higher in extended trading. Meta’s stock soared 10% after upbeat guidance and AI investment plans, while Microsoft plunged 10% to a nine-month low on concerns about slowing cloud growth and reliance on key customers. Tesla also slipped more than 2%, reversing earlier gains, underscoring the volatility across the Magnificent Seven.

The broader market felt the impact of Microsoft’s sell-off, with software stocks dragging indexes lower. The Nasdaq Composite closed down 0.7% after a sharp intraday drop, while the S&P 500 slipped 0.2%. Beyond the headline names, IBM, ServiceNow, SAP, Lam Research, and Texas Instruments also reported earnings, offering critical insights into the trajectory of the AI boom and its influence on the tech sector.

With Apple’s strong quarterly results already reported, attention now shifts to the remaining Magnificent Seven. Alphabet is set to release earnings on Wednesday, February 4, followed by Amazon a day later. Both reports are expected to provide critical insights into advertising, cloud services, and consumer demand trends.

The quarter will close with Nvidia’s highly anticipated results on February 25. As one of the most closely watched companies globally, Nvidia’s performance will serve as a key indicator of the AI boom and semiconductor demand. Together, these upcoming reports will shape investor sentiment and determine whether the Magnificent Seven can sustain their market dominance.

Apple’s latest quarterly results were driven by a 23% year-over-year surge in iPhone sales, supported by growth in iPad and services revenue. However, not all segments followed the same trajectory. Mac sales and the Wearables/Home/Accessories category posted declines, falling short of Wall Street’s expectations for growth across all five major product lines.

The mixed performance highlights Apple’s reliance on its flagship iPhone and services business to offset weakness in other areas. While strong iPhone demand continues to anchor overall results, the dip in Mac and accessories sales raises questions about consumer spending trends and product cycle timing. Analysts will be watching closely to see if Apple can rebalance growth across its portfolio in upcoming quarters.

Apple’s iPhone segment delivered a record $85.3 billion in quarterly revenue, up 23% year-over-year, far surpassing Wall Street’s estimate of $79 billion. The iPhone accounted for about 60% of Apple’s total revenue, underscoring its dominance as the company’s largest business driver. CEO Tim Cook highlighted unprecedented demand and all-time records across every geographic market, marking this as Apple’s strongest iPhone quarter in history.

The results reinforce the iPhone’s central role in Apple’s growth strategy, while also setting a high bar for future quarters. With services and other segments contributing, but not matching the scale of iPhone sales, Apple’s ability to sustain this momentum will be closely watched by investors and analysts.

Apple reported fiscal first-quarter results that exceeded Wall Street expectations, driving its shares up about 2% in after-hours trading. Revenue came in at $143.8 billion, well above the $138.1 billion consensus estimate, while net income reached $42.1 billion, surpassing the expected $39.5 billion. Despite being down roughly 5% year-to-date, Apple’s strong performance reassured investors and highlighted the company’s resilience in a competitive tech market.

The earnings beat underscores Apple’s ability to leverage its diverse product and services ecosystem to deliver consistent growth. With iPhone demand and services revenue acting as key drivers, the company continues to outperform analyst forecasts, reinforcing its position as a market leader. Investors will be watching closely to see if this momentum carries into the next quarter.

Apple’s shares remain down about 5% for the year as the company heads into its next quarterly earnings report. Despite a modest 0.7% gain on Thursday, the stock continues to trade below Wall Street’s consensus price target of $293, which sits roughly 13% above the current close. Investors are watching closely to see if upcoming results can reverse the downward trend and restore confidence in the iPhone maker’s growth trajectory.

The decline underscores investor caution as Apple balances strong product demand with broader market pressures. With earnings due shortly, analysts expect the report to be a key catalyst for the stock’s direction in early 2026. The gap between current trading levels and consensus targets highlights both risk and opportunity for traders positioning around Apple’s results.

The AI trade continues to reshape the market, with software stocks sliding on concerns about disruption while hardware-related names surged again. Lam Research jumped more than 3% after beating quarterly expectations and issuing a strong outlook, extending a blistering run that has seen shares climb over 200% in the past year. Competitors ASML, Applied Materials, and KLA also closed higher, reflecting strong demand for semiconductor manufacturing equipment.

Memory chip and data storage makers are riding the same wave, fueled by AI-driven demand from data centers. Sandisk rose more than 2% Thursday, Seagate gained 1%, and Micron edged higher, while Western Digital dipped slightly. Despite short-term fluctuations, all four stocks have gained more than 40% this year, with Sandisk more than doubling in value in just the past month. The rally underscores how AI infrastructure demand is driving profits across the semiconductor and memory sectors, even as broader tech stocks face pressure.

Microsoft suffered one of the worst single-day routs in market history, with shares dropping 11% and erasing about $400 billion in value. This marks the second-largest one-day market cap loss ever, trailing only Nvidia’s $590 billion collapse during last year’s DeepSeek panic. The sell-off pushed Microsoft’s market capitalization down to $3.15 trillion, a sharp decline that highlights investor concerns about growth momentum.

The losses also reshaped the hierarchy of America’s most valuable companies. Nvidia remains firmly at the top, about $1.5 trillion ahead of Microsoft, while Alphabet and Apple have overtaken Microsoft in market value. Once the world’s most valuable company as recently as July, Microsoft now sits in fourth place, underscoring the volatility and competitive pressures within the tech sector.

Software stocks tumbled Thursday despite solid earnings from Microsoft and ServiceNow, reflecting Wall Street’s growing uncertainty about the industry’s future in the AI era. Both Microsoft and ServiceNow shares dropped about 12%, dragging down the broader software sector. Workday, Datadog, and Intuit each fell around 8%, while Salesforce slipped 7%. The iShares Expanded Tech-Software Sector ETF (IGV) dropped nearly 6%, marking its worst day since last year’s “Liberation Day.”

The sell-off came even as Microsoft beat revenue and earnings expectations, with investor focus shifting to a slowdown in Azure growth, seen as a proxy for AI revenue. ServiceNow also topped estimates, but concerns about organic growth weighed on sentiment. Broader worries about AI-driven disruption, including “vibe coding” where AI generates code from plain language prompts, continue to pressure enterprise software valuations. While some investors argue the market is overestimating AI’s threat, software stocks remain among the weakest performers in the S&P 500 this year.

Meta Platforms delivered a standout fourth-quarter performance, with earnings per share of $8.88 and revenue of $59.9 billion, both ahead of Wall Street expectations. Shares jumped more than 10%, reaching year-to-date highs, as investors rewarded Meta’s aggressive push into artificial intelligence. Analysts praised the company’s AI-driven engagement and monetization improvements, with all 24 tracked by Visible Alpha maintaining buy ratings. Price targets were lifted across the board, including Wedbush raising its target to $900 and Jefferies to $1000, signaling strong confidence in Meta’s growth trajectory.

CEO Mark Zuckerberg emphasized that Meta’s AI investments are improving both user experience and business performance across its core apps. Meta AI, now integrated into Facebook, Instagram, WhatsApp, and Ray-Ban smart glasses, has surpassed one billion monthly active users. Analysts see potential for monetization through AI assistants for businesses, advertiser automation tools, and hardware integration. With capital expenditures projected at $162 169 billion, above Street estimates, Meta is signaling its commitment to scaling AI innovation. The market’s reaction shows investors are giving Meta the green light to lead the AI-driven future of social media and digital advertising.

Options trading suggests Apple’s stock could move about 4% in either direction following its upcoming earnings report. From Wednesday’s close at $256, that implies a potential rise to $266 or a dip to $247. Shares remain 11% below December highs, which were fueled by optimism around global smartphone demand and the iPhone 17. Apple previously topped estimates in October, with CEO Tim Cook signaling the company was on track for its best-ever holiday season.

Analysts project record quarterly revenue of $138.11 billion and earnings per share of $2.67, both up 11% year-over-year. While strong iPhone sales are expected to drive results, concerns about rising memory chip costs could weigh on margins. Wall Street sentiment leans bullish, with half of analysts recommending a buy. The average price target of $291 implies 14% upside from current levels, suggesting traders see room for recovery despite near-term volatility.

Microsoft shares fell 12% to around $425, leading losses on the Dow Jones Industrial Average and Nasdaq 100 after its latest earnings report. While revenue and earnings topped analyst expectations, investor concerns centered on slowing Azure cloud growth, rising AI infrastructure spending, and reliance on a few large customers. CFO Amy Hood noted that capacity constraints have weighed on cloud performance, while higher-than-expected investments in AI have added pressure.

The company also disclosed that nearly half of its backlog is tied to OpenAI, raising concentration risk concerns. Analysts at Morgan Stanley and Jefferies acknowledged these challenges but maintained a bullish outlook, with 14 of 15 Visible Alpha tracked analysts rating the stock a “buy.” Their average price target of $598 suggests more than 40% upside from current levels, signaling confidence that Microsoft’s long-term AI and cloud strategy could still deliver growth despite near-term volatility.

Apple’s record-breaking iPhone and services revenue lifted its results above expectations, reinforcing its dominance in consumer tech. Meta’s 10% stock surge highlighted investor confidence in its AI-driven growth strategy, while Microsoft’s 11 12% plunge underscored concerns about slowing cloud momentum, heavy AI spending, and reliance on a few major customers. Tesla and other Magnificent Seven members showed mixed performance, adding to overall market volatility.

The broader takeaway is clear: AI continues to drive winners in hardware and advertising, while software and cloud players face investor skepticism. For traders and investors, the divergence signals both opportunity and risk with Apple and Meta positioned as near-term leaders, and Microsoft under pressure to prove its AI investments will pay off.