A flurry of major earnings reports Wednesday afternoon left market watchers looking for clarity on the direction of Big Tech and the AI investment boom with little information.
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Instead, four major technology companies reported quarterly results that beat Wall Street’s official expectations, but still fell short of the lofty expectations investors had set for the companies leading the AI revolution.
Investors were most excited about the earnings results of Google’s parent company Alphabet, whose shares rose as much as 6% in after-hours trading. The company reported earnings and sales that beat analysts’ expectations and raised estimates for how much it will spend on AI infrastructure.
The gains from Facebook’s parent company, Meta, were less enthusiastically welcomed. The company’s stock price fell more than 5% after the company said it expects sales growth to remain flat in the second quarter.
Results and forecasts for Amazon and Microsoft were even more mixed. Investors ended up with both down about 3%.
Major U.S. stock indexes are hovering near record highs despite the war with Iran, rising oil prices and weak consumer sentiment.
But overall levels of business investment and consumer spending remain resilient, and companies in the S&P 500 index, an index considered to best represent overall stock market performance, are reporting their highest average net profit margins in more than 15 years, according to analysis group FactSet.
This performance is driven by the technology companies known as the Magnificent Seven: Apple, Microsoft, Alphabet, Amazon, Meta, Nvidia, and Tesla, which account for about a third of the S&P 500’s average performance.
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What’s going on with OpenAI?
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Technology industry leadership has created a double-edged sword across the market. When the technology industry is doing well, the market tends to rise. Unstable performance by technology companies can cause the market to sink.
“While stocks are once again trading at record highs, reflecting strong investor confidence, the S&P 500’s concentration of Mag7 technology leaders leaves little margin for error in valuations, increasing downside risk if earnings decline,” Chris Brigati, chief investment officer at Texas-based financial group SWBC, which has more than $1 billion in assets under management, said in a note to clients this week.
Brigati said investors continue to focus on companies’ projected future spending levels on the technology and infrastructure underlying their AI programs, and how that translates to revenue.
“Each company faces its own dynamics but is achieving tangible results from a high level. [capital expenditures] “It remains an important test,” he said.
Until the end of March, the performance of Mag 7 companies was caught in a downdraft that affected the overall market as the war with Iran got into full swing. Many had already spent much of the second half of 2025 stuck, as concerns about return schedules and seemingly cyclical funding arrangements from AI investments took hold.
But at some point in early April, investors began to notice that their most important stocks were trading at a discount to their expected earnings, said Ed Yardeni, an economist and president of Yardeni Research, a widely respected market consultant.
“I think the realization that President Trump’s exit may be in sight with the war and the ceasefire with Iran has caused investors to focus on the market again, and what they suddenly realized is that the market as a whole, and Mag7 in particular, was much cheaper,” Yardeni told NBC News.
Markets have lost some momentum in recent days amid signs that President Donald Trump plans to prolong the conflict. A Wall Street Journal report that ChatGPT maker OpenAI may miss key revenue and user goals also slowed the tech industry’s recent momentum. OpenAI remains deeply involved in the AI boom with investments in and from other big tech companies, and some investors are concerned that any weaknesses could spill over into parts of the AI ecosystem.
OpenAI called the Journal report “clickbait.”
Yardeni said how serious OpenAI’s flaws actually are and how widespread the weaknesses are remain open questions. For now, cautious investor optimism remains in the ascendant and is likely to continue to drive the market higher.
“Concerns about some of the uncertainty about whether these companies are spending too much or whether they’re getting the right rate of return appear to have been misplaced,” he said.
