‘Magnificent Seven’ earnings roundup – what’s next for big US tech stocks?

Tech earnings are in, and the big players didn’t disappoint.

From ad-fuelled growth at Meta and Alphabet to cloud wars stepping up a gear.

Earnings were largely better than expected:

Here’s a quick look at who’s leading, who’s catching up, and what it all means for investors. Plus, a preview of NVIDIA’s results due next week.

This article isn’t personal advice. If you’re not sure an investment is right for you, seek advice. Investments and any income from them will rise and fall in value, so you could get back less than you invest. Ratios also shouldn’t be looked at on their own.

Investing in an individual company isn’t right for everyone because if that company fails, you could lose your whole investment. If you cannot afford this, investing in a single company might not be right for you. You should make sure you understand the companies you’re investing in and their specific risks. You should also make sure any shares you own are part of a diversified portfolio.

Advertising trends – a rebound in digital spending

For companies like Alphabet and Meta, advertising is the fuel that keeps their engines running. Ad revenue showed robust growth across the board, with businesses spending more to reach online audiences despite uncertainty around tariffs.

Alphabet, Google's parent company, delivered steady growth in its ad business, led by a strong performance in Search. This was a key result and suggests that consumers, for now at least, are still turning to Google Search for the all-important transactional journeys.

Meta, meanwhile, stole the spotlight with strong ad gains across Facebook, Instagram, and its broader app ecosystem. This momentum is powered by smarter artificial intelligence (AI) tools that serve more relevant content, keeping users engaged longer and drawing in more ad dollars.

Amazon is still in the early stages of its advertising journey, but is making solid progress. Its sponsored product ads (those you see while shopping) are growing impressively, thanks to the scale of its e-commerce platform.

All in, advertising is holding up well despite concerns that tariffs could disrupt spending.

Meta is clearly leading in engagement-driven ad growth, while Google Search continues to show resilience, even as AI chatbots loom as potential disruptors.

Cloud computing – the AI-powered growth engine

For tech giants like Microsoft, Amazon, and Alphabet, cloud computing is the infrastructure powering the next wave of digital transformation.

Demand is rising fast, driven by businesses integrating AI into everyday operations – from streaming platforms to enterprise software.

Microsoft’s Azure led the way, posting strong growth as companies embraced AI features embedded in tools like Office and Teams. The relationship with OpenAI (the makers of ChatGPT) brings a growing stream of demand.

Alphabet’s Google Cloud was another standout in terms of growth. We’ve been impressed with how competitive Alphabet’s cloud product is for AI workloads, showcased by a new deal with OpenAI.

Amazon’s AWS posted slightly better-than-expected growth, but it lagged behind the standout results from Alphabet and Microsoft. With heavy investment in the space, quarterly performance is likely to be a little lumpy.

We'll be watching closely in the coming quarters, as some expect AWS growth to re-accelerate.

The wider narrative?

AI is accelerating cloud adoption, and the big names are positioning themselves as the backbone of that shift.

Backlogs have grown as demand is still ahead of supply, so there’s scope for further growth acceleration as we move through the rest of the year.

We think the cloud space has a promising runway ahead as AI demand grows, and businesses continue to move more traditional workloads to the cloud.

Key highlights – from iPhone wins to EV challenges

Apple turned heads with better-than-expected iPhone sales, marking a rebound in markets like China after some tough quarters. Services like the App Store and iCloud also grew nicely, showing Apple's shift toward recurring revenue beyond just hardware.

Apple still faces an innovation problem, and investors are focused on the lack of real progress on AI. With such a strong brand, it has time to get this right, but patience won't last forever.

Tesla's report was more mixed, with electric vehicle (EV) deliveries dipping amid tougher competition and a cooling market for EVs. The investment case is heavily weighted toward autonomous driving, real world AI and further down the line, Robotics.

Progress on the rollout of its Robotaxi operation has been promising and will likely be the key factor driving sentiment over the coming quarters.

What’s next for NVIDIA?

The big news for NVIDIA is that it’s set to resume sales of its restricted H20 chip to China following negotiations with the US government. In exchange for export licenses, it's set to pay 15% of all Chinese revenue to the US government.

This type of revenue share agreement is unheard of, but it’s a reasonably small price to pay to reopen the Chinese market.

Investors will be keen to hear any commentary on how long it will take for deliveries to ramp up.

We don’t expect any meaningful impact in the upcoming second-quarter results, but we believe new Chinese sales could drive a $10bn revenue uplift by year-end, potentially $15bn+ if things move fast.

NVIDIA might also be able to reverse some of the $4.5bn inventory write-down from the first quarter, providing a direct boost to earnings, though nothing is guaranteed.

Outside of China, overall demand remains critical.

We’ve already heard from major customers that expanding data centres is a priority, which should benefit NVIDIA.

Margins will also be worth watching. In theory, we should start to see some improvement as deliveries of its latest chip technology continue to scale.

The author holds shares in NVIDIA.

This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Past performance is not a guide to the future. Investments rise and fall in value so investors could make a loss. Yields are variable and not guaranteed.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.

Article image credit: SOPA Images / Getty Images.