Market reacts positively to some tech companies' Q1 results, with cloud businesses showing strengths

From Nasdaq, Inc.: 2025-05-02 18:09:00

The market reacted positively to Microsoft (MSFT) and Meta Platforms (META) results, with Amazon (AMZN) showing some strengths, but Apple (AAPL) numbers were not well-received. Q1 results from 6 members of the ‘Magnificent 7’ group revealed varying growth rates, with Alphabet leading at +46%. The companies are focused on capex plans, particularly in AI infrastructure building.

Amazon’s cloud business growth decelerated in Q1 due to capacity constraints, with AWS revenues up +16.9%. Microsoft’s cloud business showed better growth trends compared to Amazon and Alphabet. Amazon’s modestly lowered Q2 earnings guidance was not tariffs-related, highlighting the resilience of its business model amid challenges.

Apple faced the most significant tariff impact in Q1, impacting gross margins by about 100 basis points. The company’s exposure to China and competition from local rivals present challenges. The Mag 7 group is expected to bring in 23.9% of all S&P 500 earnings in 2025, reflecting their substantial market influence.

Q1 earnings reports from major companies like Ford, Disney, and Uber are eagerly anticipated this week, with over 1300 companies set to report results. The Q1 earnings scorecard for 358 S&P 500 members shows a +13.4% growth in earnings and +4.3% revenue gains, with a majority beating EPS and revenue estimates.

Estimates for Q1 earnings growth are expected to be up +11.6% from last year, with +4.5% higher revenues. However, these estimates have come under pressure recently, with negative revisions in various sectors like Transportation, Energy, and Tech. The market reflects diminished earnings expectations, impacting overall performance.

The evolving earnings picture for full-year 2025 shows pressure on estimates, with most sectors experiencing negative revisions. Earnings growth expectations for 2025 Q1 are slightly improving following better-than-expected Q1 results. The market remains cautious amid uncertainty, impacting earnings expectations and stock performance.



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