Big Tech Earnings Forecast: Meta Stock Rally, Microsoft Decline & Apple Report Ahead

The Big Tech earnings season is in full swing, with stocks moving sharply after results. Microsoft (MSFT), Meta Platforms (META), and Tesla (TSLA) all reported quarterly earnings that beat Wall Street expectations late Wednesday, but their shares diverged in trading. Meta surged 10% as investors cheered its upbeat AI outlook, while Microsoft plunged 12% to a nine‑month low on concerns about slowing cloud growth and reliance on a few major customers. Tesla slipped 3%, reversing early gains.

Microsoft’s sell‑off, combined with steep declines in software stocks, dragged major indexes lower. The Nasdaq Composite fell 1.4% after dropping as much as 2.5% earlier, while the S&P 500 lost 0.6%. Apple (AAPL) is set to report after the closing bell, a key event for traders watching the Magnificent Seven. Beyond the headline names, IBM, ServiceNow, SAP, Lam Research, and Texas Instruments also posted earnings this week, offering fresh insights into the trajectory of the AI boom across the broader tech sector.

Software stocks tumbled Thursday despite strong earnings from Microsoft (MSFT) and ServiceNow (NOW), reflecting Wall Street’s growing uncertainty about the sector’s future in the AI era. Microsoft and ServiceNow shares each fell about 12%, dragging the broader software space lower. Workday (WDAY), Datadog (DDOG), and Intuit (INTU) dropped around 8%, while Salesforce (CRM) slid 7%. The iShares Expanded Tech-Software Sector ETF (IGV) sank nearly 6%, marking its worst day in almost a year.

Microsoft’s earnings beat was overshadowed by slowing Azure growth, which investors view as a proxy for AI revenue. ServiceNow also topped estimates, but concerns about organic growth persisted. Even before this sell-off, software stocks were among the weakest performers in the S&P 500 this year, as investors debated whether AI-driven “vibe coding” where AI generates code from plain language prompts could erode enterprise software demand. While some analysts argue the market is overestimating AI’s threat, sentiment remains cautious.

Meta Platforms surged more than 10% to year‑to‑date highs after its fourth‑quarter earnings topped Wall Street estimates across the board, underscoring how its AI investments are paying off. The company’s EPS of $8.88 beat Visible Alpha’s $8.24 estimate, while revenue hit $59.9 billion versus $58.4 billion expected. Guidance for the current quarter also exceeded Street forecasts, reinforcing confidence in Meta’s growth trajectory. Investors rewarded the stock, making it one of the top gainers in the S&P 500 and the only Magnificent Seven member climbing, while peers like Microsoft, Nvidia, Alphabet, Amazon, and Tesla slipped, and Apple held modest gains ahead of its report.

Analysts are increasingly bullish, with all 24 tracked by Visible Alpha rating Meta a “buy” and setting a mean price target of $868, implying 20% upside. Wedbush raised its target to $900, citing Meta’s potential to monetize its AI assistant across business agents, advertiser automation, and hardware integration. Morgan Stanley lifted its target to $825, while Jefferies boosted theirs to $1,000, reflecting confidence in accelerating revenue growth. Meta AI, now integrated across Facebook, Instagram, WhatsApp, and Ray‑Ban smart glasses, has surpassed one billion monthly active users. Despite a hefty capital expenditure guide of $162 169 billion, above Street estimates, investors appear supportive of Meta’s aggressive AI rollout strategy.

Options trading data suggests Apple’s (AAPL) stock could swing about 4% in either direction by the end of the week. From Wednesday’s close at $256, that implies a potential move up to $266 still 7% below December’s record or down to $247. Shares remain about 11% off their early December highs, which were fueled by optimism around global smartphone demand and strong iPhone 17 sales. Apple topped estimates in October, when CEO Tim Cook projected the company was on track for its best-ever holiday season.

Apple is expected to post record revenue of $138.11 billion and earnings per share of $2.67, both up 11% year-over-year, according to Visible Alpha. Analysts at JPMorgan, UBS, and Morgan Stanley flagged margin risks tied to a global memory chip shortage, warning that rising costs could overshadow otherwise solid iPhone results. Still, sentiment leans bullish: of eight analysts tracked, four rate Apple a “buy,” three are neutral, and one has a “sell.” Their average price target of $291 implies 14% upside from current levels, about $5 above Apple’s closing record.

Microsoft (MSFT) shares plunged 12% to around $425 in Thursday trading, leading declines on the Dow Jones Industrial Average and Nasdaq 100. The drop came despite quarterly revenue and earnings topping analyst estimates, as investor focus shifted to slowing Azure cloud growth, rising AI infrastructure spending, and reliance on a few large customers. Morgan Stanley noted Azure growth narrowly beat guidance but fell short of broader Wall Street expectations. CFO Amy Hood acknowledged capacity constraints and emphasized heavy AI investment, which has raised concerns about profitability.

Adding to investor unease, Microsoft disclosed that nearly half of its backlog is tied to OpenAI, sparking worries about concentration risk and OpenAI’s ability to meet massive financial commitments. Still, Jefferies and Morgan Stanley remain optimistic, projecting gains ahead. Analyst sentiment is broadly bullish, with 14 of 15 tracked by Visible Alpha rating the stock a “buy.” Their average price target of $598 implies more than 40% upside from current levels, suggesting confidence in Microsoft’s long-term growth despite near-term volatility.

Meta’s strong fourth‑quarter results and AI momentum sent its shares soaring more than 10%, making it the only Magnificent Seven stock in positive territory today. Microsoft, by contrast, plunged 12% on concerns about slowing Azure growth, heavy AI spending, and reliance on a few large customers, dragging software stocks and major indexes lower. Tesla also slipped, while Apple’s earnings release after the bell remains the next key catalyst for traders.

Beyond the headline names, IBM, ServiceNow, SAP, Lam Research, and Texas Instruments all reported earnings this week, offering broader signals about how the AI boom is reshaping the tech sector. The split performance underscores investor focus on whether AI investments can translate into sustainable growth across cloud, hardware, and enterprise software.