The focus of the financial reports of the four major US technology giants: Apple’s execution, Microsoft’s computing power, Meta’s investment, and Tesla’s imagination

# Source: Wall Street Insights

By Xu Chao

The trading logic for this earnings season is extremely clear: instead of focusing on earnings per share (EPS) from the past three months, investors should keep a close eye on capital expenditure (Capex) guidance and the fulfillment rate of growth narratives. Meta faces significant risks of out-of-control capital expenditures; if its guidance exceeds expectations, its valuation will come under intense pressure. Microsoft, on the other hand, is in the sweet spot of the "computing power arms race". Apple will once again prove its iron-fisted control over the supply chain. Tesla's fundamentals have moved beyond car manufacturing, evolving into a game centered around the SpaceX IPO and the timeline for Robotaxi deployment.

With the VIX index hovering around 16, the market is holding its breath for the tech giants' earnings season. The trading logic for this round of earnings reports is crystal clear: rather than fixating on the EPS of the past three months, it is better to focus on Capex guidance and the delivery rate of growth stories.

For investors, the most direct risk lies in the mismatch between narratives and cash flow: Meta is exposed to severe risks of runaway capital expenditure, and its valuation will face heavy pressure if the guidance surpasses expectations. Microsoft, however, is in the sweet spot of the "computing power arms race". Goldman Sachs expects Azure's growth rate to rebound to over 40%, making any pullback a buying opportunity.

Apple will once again demonstrate its tight grip on the supply chain. JPMorgan points out that even amid the rising cycle of storage costs, Apple can still maintain its profit margins and exceed expectations with the iPhone 17 cycle. As for Tesla, its fundamentals have strayed from car-making, turning into a tug-of-war over the layout of Musk’s business empire (SpaceX IPO) and the timetable for Robotaxi.

## Tesla: Electric Vehicles Are Just a Pretense; What Shareholders Want Is a Ticket to SpaceX

Ahead of the earnings release, there has been a fundamental shift in the focus of Tesla shareholders. The top question voted by retail investors on Say.com is extremely straightforward: "You once said: Loyalty deserves loyalty in return. If SpaceX conducts an IPO, will long-term Tesla shareholders be given priority?"

This anxiety stems from the valuation inversion and the weakness of the core business. SpaceX is seeking a valuation of $1.5 trillion, nearly double Tesla’s current market capitalization of $800 billion. In contrast, Tesla’s own car-making business has been disappointing: only 20,237 Cybertrucks were sold in 2025, a sharp plunge of 48% year-on-year.

Investors are essentially asking Musk to pay a "loyalty premium". Although Musk has verbally expressed the hope of taking care of Tesla shareholders, the specific implementation path through a "directed share program" remains unclear.

Beyond the allure of SpaceX, Tesla’s remaining narrative is entirely supported by "imagination".

Management needs to address the specific bottlenecks of Robotaxi during the earnings call, as well as when the so-called "unsupervised" Full Self-Driving (FSD) can be truly rolled out. While Musk claims that autonomous driving is a "solved problem" and predicts it will be widely available by the end of the year, the market needs to see the expansion timetable of Robotaxi beyond Austin and the San Francisco Bay Area. As for the humanoid robot Optimus, although Musk has set a launch date of late 2027, the current reality that "the supply chain does not exist" makes this commitment highly uncertain.

## Meta: A High-Stakes Gamble; 2026 Capital Expenditure May Exceed $110 Billion

In his preview report, Bank of America analyst Justin Post stated bluntly that the focus of Meta’s quarter is not whether Q4 performance can exceed expectations (which is highly likely, with expected revenue of $59.2 billion), but rather the management’s guidance on 2026 expenses—a Sword of Damocles hanging over its head.

The figures are staggering. Bank of America forecasts that Meta’s total expenses will surge to $153 billion–$160 billion in 2026, a year-on-year increase of 30–36%. Even more eye-popping is the capital expenditure, which is expected to reach $109 billion–$114 billion. This frenzied investment is mainly driven by infrastructure construction, including power transactions with nuclear energy companies and the newly established "Meta Compute" team.

Although the Reality Labs division laid off about 10% of its staff (1,000–1,500 employees) to signal a contraction of its VR/metaverse business, the money saved is far from enough to fill the hole left by AI investment.

Bank of America believes that as long as Meta can prove that these expensive GPUs and data centers can drive growth in its core advertising business (such as AI-powered targeted advertising), the market will be able to accept it. In addition, the next-generation LLM model codenamed "Avocado" is expected to be launched in the spring of 2026, which will be a key node to verify whether its huge investment is effective.

## Microsoft: Azure’s Growth Rate Rebounding to 40% Is the Last Line of Defense for Bulls

Microsoft’s stock price has fallen 13% since the Q1 earnings report, underperforming the Nasdaq index. Goldman Sachs analyst Gabriela Borges believes that the market’s concerns about the OpenAI ecosystem and Azure’s competitive position are overdone.

Goldman Sachs’ core judgment is that Azure’s growth is bottoming out. Analysts expect Azure’s revenue growth rate (at constant currency) to reach 39% in Q2, with a path to rebound to the range of 40%–45% in the next four quarters. In response to market criticism of the huge Capex investment, Goldman Sachs calculated that Microsoft’s investment efficiency is not low—from Q4 of fiscal year 2025 to Q4 of fiscal year 2027, the revenue generated per gigawatt (GW) of Azure will roughly double.

Goldman Sachs’ field research shows that the corporate IT budget environment is looser than it was a year ago, and the adoption rate of Copilot is rising. Despite discount promotions, customers are shifting from the experimental phase to full-scale deployment.

Microsoft is not burning money blindly; its GPU computing power allocation is highly strategic: prioritizing first-party applications such as Copilot (which have better unit economics) and internal R&D. For this quarter’s earnings report, as long as Azure’s growth rate stabilizes around 39% and maintains the range of 38%–40% in the next quarter’s guidance, it will effectively repair market sentiment.

## Apple: An Execution Machine That Ignores Cost Pressures

While the market is worried that rising memory chip prices will erode hardware profits, JPMorgan analyst Samik Chatterjee has reached the opposite conclusion: Apple’s economies of scale are sufficient to absorb these costs.

JPMorgan has sharply raised Apple’s target price to $315, with the core logic lying in the strong demand for the iPhone 17 series. Analysts predict that iPhone revenue in F1Q (the December quarter) will reach $80.2 billion, a year-on-year increase of 6%, far exceeding the market’s implied expectation of 13%. This better-than-expected hardware revenue growth, combined with a stable gross profit margin of 47.6%, will overshadow minor noises in the services business.

Although the revenue growth rate of the App Store may slow to around 7%, this is only part of the services segment. Apple has sufficient leverage (such as iCloud and Apple Care) to maintain the overall service revenue growth rate at a high level of 14%.

More importantly, the market is waiting for the arrival of the iPhone 18 cycle (including foldable models), and the current strong execution is just paving the way for the next super cycle. In addition, since the access fees for AI-related Gemini models have not been incurred on a large scale in F1Q, the operating expenses (Opex) for the quarter are expected to be lower than the guidance, further releasing upside surprises for earnings per share (EPS).

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The above exciting content is from Zhuifeng Trading Desk.

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