Microsoft, Meta and Amazon earnings test the AI cycle

Big tech earnings arrive with Nasdaq 100 at key support

Earnings season is entering its decisive phase. Microsoft and Meta report after the US close on Wednesday 29 July, followed by Apple and Amazon on Thursday.

Together, these four Magnificent Seven stocks account for more than 30% of the Nasdaq 100.

They arrive at a critical moment, as technology stocks and mega-cap shares are losing positive momentum and the Nasdaq 100 is beginning to test the base of its sideways range from the past quarter, marked by the June low around 28,196 points.

This support could still act as an entry point within the broader uptrend. However, a break below it would open the door to a longer-term mean-reversion scenario towards the 200-day moving average, which sits around the former key resistance zone between 26,182 and 26,161 points.

Big tech earnings calendar

Source: TradingView, 28 July 2026

Market questions returns on AI capex

Over the past two years, markets rewarded almost any increase in capex directed towards artificial intelligence. Now the question has changed: it is no longer only how much AI will grow, but when the huge investments already made will begin generating sufficient returns.

This concern affects not only the large hyperscalers but increasingly the wider technology ecosystem, including semiconductor stocks, which led market performance for much of 2026.

For hyperscalers, attention is focused on their ability to monetise multibillion-dollar investment in data centres in a more demanding financing environment. Higher credit costs are putting particular pressure on companies with tighter cash flow and greater dependence on external financing to sustain capex growth.

Reflecting these concerns, Microsoft, Oracle, Amazon, Meta and Alphabet are currently trading below their long-term moving averages.

Doubts are also spreading into the credit market. Five-year credit default swaps have moved above 60 basis points for Alphabet, Amazon and Nvidia, while Meta and Broadcom are trading above 90 basis points.

The market is demanding a higher risk premium amid fears that returns on AI investment may take longer to materialise and that concentrated spending by a small number of companies could increase financial risk across the sector.

AI cycle performance, May 2025 – present

Source: TradingView, 28 July 2026

Capex supports the cycle, but China starts to worry the sector

The increase in capex by major hyperscalers continues to support the AI investment cycle and semiconductor-industry growth. Alphabet's decision to lift investment by around USD 15bn was a clear example, helping drive a strong move in the SOXX ETF last week.

However, investors are starting to look beyond the level of investment itself. Despite a favourable demand backdrop, the sector is beginning to show weakness as doubts about future competition intensify.

One key source of concern is China. A consortium of local companies has started manufacturing immersion DUV lithography machines aimed at domestic chipmakers such as SMIC. The goal is to accelerate China's reduction of technological dependence on the West, a threat already reflected in the weakness of ASML and the wider semiconductor-equipment industry.

The recent IPO of CXMT, China's largest DRAM memory-chip maker, has added to the shift in perception. Its debut on Shanghai's STAR market, often described as China's Nasdaq, became Asia's largest IPO of 2026 after raising around USD 8.6bn and reaching a valuation close to USD 500bn.

Microsoft weekly chart

Source: TradingView, 28 July 2026

Correction reveals upside versus target prices

The positive aspect of the recent pullback is that lower share prices are revealing upside relative to consensus analyst targets.

Amazon, Microsoft and Meta all carry strong buy recommendations, with one-year upside potential around 40%.

Morningstar's quantitative ratings also assign five stars to both Microsoft and Meta. These metrics suggest that if the risks around AI investment do not materialise, the current correction could represent one of the better entry windows in recent years for investors seeking exposure to the long-term uptrend.

Meta weekly chart

Source: TradingView, 28 July 2026

Investors watch Microsoft, Meta and Amazon support levels

The upcoming results will not only determine the immediate direction of Microsoft, Meta and Amazon. They will also test whether the market is exaggerating risks around the AI investment cycle, or whether doubts about capex returns justify a deeper valuation reset for the sector.

In this context, technical analysis is especially important. Microsoft and Meta are entering results from a relatively delicate position, trading close to long-term supports around their 2025 lows: USD 520.06 and USD 481.90 for Meta, and USD 349.20 and USD 344.79 for Microsoft. These are areas where volume still points to buying interest, reinforcing their importance as validation levels for the broader trend.

As long as these supports hold, the central scenario remains consolidation within the long-term uptrend. Only a significant disappointment in earnings or revenue, combined with guidance that casts doubt on the continuity of capex or points to a slowdown in the AI investment cycle, would materially increase the risk of a deeper correction.

Amazon has preserved its bullish structure more effectively. The shares continue to trade around their long-term moving average, although weakening volume momentum means investors should watch the June low at USD 225.55. A break below that level would open the door to a deeper correction.

Amazon weekly chart

Source: TradingView, 28 July 2026