The tech sector, represented by XLK and QQQ ETFs, has seen a slow start in 2026, up only 2.8% YTD. The underperformance is due to heavy weighting in underperforming mega-cap tech stocks. Earnings reports from Microsoft, Tesla, and Meta after Jan. 28 bell could be pivotal for sector breakout.

Microsoft reports fiscal Q2 2026 results on Jan. 28, with a focus on AI spending. Q1 capex was $34.9 billion, higher than expected due to AI and cloud demand. Analysts expect revenue of $79.5 billion to $80.6 billion and EPS of $3.88 to $3.91.

Tesla anticipates a challenging quarter with a predicted EPS around 44 to 45 cents for Q4 2025. Revenue near $24.8 billion reflects lower deliveries and higher spending. Investors may focus on energy storage, robotaxis, and capex commentary.

Meta enters earnings with a strong week, up 10%, and high expectations for a beat. Analysts project EPS between $8.16 and $8.32, driven by advertising strength. CapEx levels and profitability guidance will influence stock movement.

The tech sector awaits guidance on AI spending and monetization from Microsoft, Tesla, and Meta earnings. Market reaction matters less than insights into future quarters. Investors seek confidence in demand and potential breakout for XLK and QQQ.

Read more at Nasdaq: Mega-Cap Earnings Could Decide the Tech Sector’s Next Big Move