The Smart Finance APP noted that the last time the tech giants released their earnings reports, Trump had just begun his term, and the stock market soared in anticipation of a pro-growth government agenda. The main concern for investors was how long it would take for companies to turn AI spending into profits.

Three months later, the situation they face is much more bleak.

This week $Microsoft (MSFT.US)$ 、 $Apple (AAPL.US)$ 、 $Meta Platforms (META.US)$ and $Amazon (AMZN.US)$ The quarterly earnings reports will be released in a market troubled by every twist in the trade war, which has led to a evaporation of $5.5 trillion in Market Cap for the S&P 500 Index. The focus on AI has given way to worries about the economic recession triggered by tariffs, and safe-haven assets like Gold have become the trading choices for investors who are too anxious to Buy Stocks at Low Stock Price.

Despite the many uncertainties, Wall Street has not left much room for expectations regarding these companies. Analysts expect that the so-called "Seven Giants" - also includes $Alphabet-C (GOOG.US)$ 、 $Tesla (TSLA.US)$ and $NVIDIA (NVDA.US)$ The average profit growth for 2025 is expected to reach 15%, a forecast that has changed little since the trade tensions intensified in early March.

This raises the risk for the four giants releasing their Earnings Reports this week, whose combined weight in the S&P 500 Index is nearly 20%. Traders are unlikely to forgive earnings that fall short of expectations in an already fearful market environment, even though the stock prices of these companies have significantly dropped and valuations have improved.

The pessimistic outlook of industry giants will also not be welcomed, especially if it intensifies concerns about weak future corporate spending.

"Any number slightly weaker than expected will lead to further selling due to concerns about tariffs," said Phil Blankahto, chief market strategist at Osaic Wealth, who believes the weakness of giants this year is a Buy opportunity.

The market had already gotten a preview last week of the possible performance of technology giants. Tesla reported its worst quarterly results in years, although traders welcomed signs that CEO Elon Musk intends to step back from government work and focus more on the electric vehicle manufacturer.

Alphabet's performance exceeded expectations but provided little guidance for the future. Bloomberg's "Seven Giants" Index rose 9.1% last week amidst a broader market rebound, but is still down 15% for 2025.

Profits and spending

Deeper insights will come in the two-day Earnings Reports release, with Meta Platforms and Microsoft set to announce their results first on Wednesday. While many executives refuse to predict how tariffs may affect their profits, Wall Street has been doing its own calculations.

Bloomberg Intelligence’s chief equity strategist, Gina Martin Adams, wrote that, based on Bloomberg's economic model with a 22% tariff rate, a decrease in gross margin could lead to a contraction of approximately 7% in the S&P 500 Index's net income for 2025, while the current consensus expectation is nearly 12% growth.

Another key point of concern is spending: the four major spending giants—Microsoft, Alphabet, Amazon, and Meta—are expected to invest approximately $300 billion in capital expenditures for the current fiscal year. Although these companies have committed to maintaining this pace until 2025, Microsoft's sudden decision to pause some Datacenter operations suggests that Cloud Computing providers may be reassessing their spending.

Apple has become one of the companies most vulnerable to tariffs due to its supply chain dependence on China, and it may benefit from demand for early purchases by Consumers to avoid price increases. However, these sales are seen as one-time gains, and tariffs will weaken demand in the coming quarters. Jefferies Financial Analyst Brent Hill stated that Amazon's E-Commerce and advertising Business faces tariff risks, although the earnings from its high-margin network services sector may buffer the impact on profits.

Nevertheless, given the high uncertainty in the macroeconomy, there is little expectation that executives will be able to provide any confident forecasts. Companies like American Airlines and Skechers USA have abandoned their forecasts for this quarter.

Michael Shour, founder of ION Macro Fund, stated that executives find it difficult to convince the market that they have a real understanding of the financial performance for the coming quarters.

"I think more experienced management teams wouldn't even try," he stated.

Of course, a bullish viewpoint is that the dominance of Tech giants in the Industry and their strong balance sheets make them better positioned than others to withstand an economic downturn—even if the earnings outlook is unclear. The 'Seven Giants' also no longer have such high valuations after the recent sell-off: data shows that Alphabet's PE is 17 times the expected earnings for the next 12 months, compared to an average of 21 times over the past decade.

This may enhance the appeal of the 'Seven Giants' to Buy on the dip, especially if there are signs of easing in the Global trade war. Such a situation arose last week when Trump stated that an agreement with Peking would significantly reduce tariffs he imposes on Chinese Commodities, leading the stock market to soar.

But for Keith Lerner, Co-Chief Investment Officer and Chief Market Strategist at Truist Advisory Services, it all comes down to the denominator in the PE.

"Valuation is becoming increasingly interesting here, but we haven't pulled the trigger yet," he said. "There are a lot of issues with the E side of this equation."

Editor/Somer