Mag 7

Amazon delivered a solid first-quarter performance, with revenue of $155.7 billion, up 9% year over year and slightly above the Street's estimates of $155.2 billion. Moreover, operating income rose to $18.4 billion, above the Street's expectation of $17.5 billion and indicating the long-term health of the company's core businesses.

AWS Net Sales growth, source: Amazon investor relations

At the heart of Amazon's profitability story remains Amazon Web Services. AWS generated revenue of $29.3 billion, up slightly from $28.8 billion last quarter and a 17% year-over-year jump. Operating income at the cloud business jumped to $11.5 billion, from $9.4 billion in Q1 2024, cementing AWS as Amazon's high-margin crown jewel and primary growth engine.

Slowdown in AWS revenue growth - source bloomberg.com

Nevertheless, the quarter was not free of competitive stresses. Microsoft's Azure platform once more grew faster than AWS, expanding 33% year-over-year—almost twice the rate of Amazon's cloud business. Microsoft attributed almost half of that growth to AI-driven demand, reflecting its early advantage in AI adoption among enterprises. The company posted overall revenue of $70.1 billion, a rise of 13%, and earnings of $3.46 a share, both easily exceeding expectations.

Azure and other cloud services growth y/y

Azure and other cloud services growth (y/y) source: Microsoft investor relations

Alphabet's Google Cloud is also solidifying its position as the third-largest cloud vendor. The division recorded first-quarter revenue of $12.8 billion, year-over-year growth of 28%, and operating income of $2.18 billion—much better than expected. Similar to Microsoft and Amazon, Google is experiencing more demand from corporate clients for AI infrastructure and services.

Google Cloud Revenues Q1 2025, source: alphabet investor relations

Looking ahead, Amazon offered a more restrained forecast. For the second quarter, it expects operating income of $13 billion to $17.5 billion, falling short of the $17.8 billion forecast. Revenue guidance of $159 billion to $164 billion is in line with expectations. CEO Andy Jassy cited ongoing macro uncertainties, including trade tensions, currency volatility, and overall economic volatility, as risks to the months ahead.

Stay tuned to our Mag 7 coverage.

Judge: Apple Violated Court Order

A federal judge ruled that Apple Inc. defied a 2021 court order requiring it to loosen control over in-app payments on its App Store.U.S. District Judge Yvonne Gonzalez Rogers found Apple in civil contempt and referred the case to prosecutors for a potential criminal investigation. She said, Alex Roman, Apple’s vice president of finance may have lied under oath.

The Original Ruling in 2021

In 2021, Gonzalez Rogers mostly ruled in Apple’s favor in its fight with Epic Games, saying its App Store didn’t violate federal antitrust law. But she ordered Apple to allow developers to steer users to external payment systems—bypassing the company’s up-to-30% commission. The order was upheld last year when the U.S. Supreme Court declined to hear Apple’s appeal.

Appstore Photo by James Yarema on Unsplash

Apple’s 27% Workaround Backfires

Following the 2021 court ruling, Apple allowed developers to link to external payment sites—but imposed a 27% fee on those transactions. Gonzalez Rogers called the move an attempt to “circumvent” court's order and said Apple tried to conceal what it was doing. The judge’s new ruling blocks Apple from collecting fees on payments made outside its App Store.

Epic Claims a Win for Developers

Epic Games CEO Tim Sweeney called the decision a “huge victory for developers.” He said it forces Apple to compete on payment services rather than blocking rivals outright. Epic has long argued that Apple’s rules are monopolistic and harmful to smaller developers.

Apple’s Business Model at Risk

The decision threatens a key revenue stream. Apple’s App Store generates tens of billions each year. Now, the company may have to give up commissions on purchases it doesn’t process. It’s also facing pressure in a separate antitrust case over its default search deal with Google.

Apple shares are down 1% in premarket trading ahead of its quarterly earnings report due after the market close.

Meta Beats Earnings

• Revenue: Est. $41.38B | Actual $42.31B
• EPS: Est. $5.27 | Actual $6.43

Meta Platforms saw good first-quarter numbers with an earnings-per-share figure of $6.43 on revenue of $42.31 billion—both significantly more than expected. The upbeat report propelled shares nearly 4% higher in after-hours trading and illustrated the firm's continued traction in digital ads amidst trade-policy angst and broader tech industry jitters. Meta raised its 2025 capital expenditure forecast to a range of $64 billion to $72 billion, up from its previous estimate of $60 billion to $65 billion.

Meta CFO Outlook Commentary

We expect second quarter 2025 total revenue to be in the range of $42.5-45.5 billion. Our guidance assumes foreign currency is an approximately 1% tailwind to year-over-year total revenue growth, based on current exchange rates.

earnings link

Microsoft Beats Earnings

• Revenue: Est. $68.4B | Actual $70.07
• EPS: Est. $3.21 | Actual $3.46

Microsoft posted a stellar quarter with a 13% year-on-year revenue growth to $70.1 billion and adjusted profit of $3.46 a share, toppling analyst predictions. Azure, the company's cloud computing business, continued on its hot streak with 33% growth—a testament to Microsoft's strategic head start in the enterprise AI space. Shares increased 6% in after-market trading, with investors welcoming the strong results against a turbulent macro backdrop. Despite tariff uncertainty and its year-to-date decline in stock, Microsoft's earnings sustained confidence in its underlying growth drivers.

earnings link

Nvidia’s stock dipped -2% in early trading after Super Micro Computer ( NASDAQ: SMCI ) issued a cautious outlook, fuelling concerns about the broader AI server market. SMCI shares are down -16% in premarket trading. Super Micro revealed that some customers are postponing purchases, holding out for newer systems built with Nvidia’s upcoming Blackwell chips instead of the current Hopper generation.

SMCI's Q2 Guidance

• Q2 revenue between $5.5 billion and $6.1 billion versus estimates of $6.84 billion
• Q2 adjusted EPS of $0.56 to $0.65 compared to expectations of $0.81

We believe that lower guidance from SMCI is not a significant concern for Nvidia, as long as the company can ramp up sales of Blackwell hardware to meet demand.

Nvidia Photo by BoliviaInteligente on Unsplash

Looking ahead, what Nvidia needs most is confirmation from Meta and Microsoft’s earnings today that they are maintaining their previously guided capital expenditure levels. This would be a major win for Nvidia. In Alphabet's earnings, we saw that they didn’t reduce AI spending, and we hope to see the same trend among other hyperscalers. Tonight’s earnings reports from Meta and Microsoft will provide further confirmation and offer support to Nvidia’s stock, which has been struggling to break through the $110 resistance level.

Tesla (TSLA) has been hammered in 2025, with the stock down 29% year-to-date through Monday's close, versus the wider S&P 500's drop of just 7%. But a new insider buy is creating a stir. Director Joe Gebbia bought 4,000 Tesla shares on April 24 for over $1 million, signaling confidence in the company's future.

Insider Confidence

Gebbia's purchase is the first insider buy since 2020, and he paid an average price of $256.31 per share. His trust now holds a total of 4,111 shares, according to an SEC filing. When insiders start buying, it often raises the question: Do they see the stock as undervalued? It could be a sign that the company’s leadership believes in the stock’s potential.

CEO Musk’s Focus Shift

Tesla's stock got a lift last week when CEO Elon Musk announced he’d be spending more time at Tesla’s headquarters and less time focused on his role with the Department of Government Operations (DOGE) in Washington, D.C. Investors were hopeful that Musk’s shift in priorities might spark some renewed energy and focus on driving Tesla forward.

Tesla showing it's new Roadster at Grand Basel exhibition in Switzerland - Photo by Tesla Fans Schweiz on Unsplash

🚨 Tariff Policy Changes 🚨

Another key factor that could impact Tesla’s stock is the potential change in auto tariffs. President Donald Trump is expected to revise auto tariff policies, including offering a 3.75% credit on imported car parts. The announcement could come at a rally in Warren, Mich., planned to start around 6 p.m. Eastern time. While Tesla doesn’t import finished vehicles, this change could help offset the impact of tariffs on Tesla’s parts supply chain and ultimately benefit the company.

Tesla shares are down 1% today, the biggest drop among the Mag 7 stocks. However, the easing of auto tariffs could act as a potential catalyst and offer some upside in the near term.

OpenAI has introduced a shopping feature within ChatGPT, allowing users to receive product recommendations and directly access retailers such as Amazon and Walmart. While checkout happens off-platform, the shopping feature is designed to offer users convenience and personalization. Product suggestions are based on user preferences, online reviews, and sources like Reddit.

OpenAI Photo by Levart_Photographer on Unsplash

OpenAI hasn’t finalized how affiliate revenue will work, but says it’s experimenting. With goals of growing revenue from $4 billion in 2024 to $125 billion by 2029, features such as ChatGPT Shopping and its AI agent "Operator" could become key drivers.

This development has impacted Alphabet Inc. (GOOG), Google's parent company. As of the latest trading session, GOOG shares are down approximately 1%, reflecting investor concerns over OpenAI's growing influence in the search and e-commerce sectors.

Apple shares are showing relative strength compared to the rest of the Magnificent Seven today, down just 0.10% as of the time of writing. In comparison, Amazon and Google are both down around 2%, Nvidia has fallen 4%, and Tesla is off by 3%. Apple’s relative resilience follows an upgrade from Morgan Stanley earlier today, helping it weather the broader tech sell-off.

Morgan Stanley remains bullish on Apple, focusing on its strong market position. The firm doesn’t expect the upcoming earnings report to significantly impact the stock, and analysts believe the price will remain stable, with $170 as key support. In line with its positive outlook,

Morgan Stanley raised its price target for Apple to $235 from $220.

Tesla reported mixed Q1 results, with EPS down 40% to 27 cents per share and revenue falling 9% to $19.335 billion. However, the stock rose post-earnings due to CEO Elon Musk’s return to the company after his time with the Trump administration.

A new framework for autonomous vehicles introduced by Transportation Secretary Sean Duffy also provided a boost, lifting Tesla shares over 10% on the news. Since its earnings release on April 22, Tesla shares have risen around 10%, though Monday’s session is seeing some profit-taking after the recent rally.

Nvidia is the biggest laggard in the MAG 7 today. The Wall Street Journal reported that Huawei Technologies is testing its advanced AI processor to compete with Nvidia’s high-end offerings. Huawei's Ascend AI processors aim to rival Nvidia's H100, with sample shipments scheduled for late May. Growing competition from China is weighing heavily on Nvidia shares.

Elon Musk’s xAI is reportedly seeking to raise $20 billion in funding, which is a positive development for Nvidia. However, concerns about rising competition from Huawei are outweighing the good news.

The Wall Street Journal reported that Huawei Technologies plans to test its most powerful artificial-intelligence processor with the goal of rivaling some of Nvidia's more high-end offerings. The firm hopes its Ascend AI processors will outperform Nvidia's H100. Its first shipment of processor samples is scheduled for late May, according to the report.

In context, Nvidia's H100 chip was prohibited from sale in China by US regulators in 2022, before it even reached the market.

Key Points

• Analysts expect an EPS of $1.37 and revenue of approximately $155.08 billion.
• Tariffs and declining consumer sentiment may affect Amazon's costs and sales.
• Recent reports on pausing datacenter leases hint at AWS growth decelerating.
• A weaker U.S. dollar may offset the $2.1B forex hit factored into the Q4 2024 guidance.

Amazon will report its first-quarter earnings after the market close on Thursday, May 1, 2025. The analysts' consensus calls for EPS of $1.37, up from $0.98 reported in the same quarter last year. The Street's revenue consensus is roughly $155.08 billion.

Amazon significantly reduced its Q1 2025 guidance when it reported its Q4 2024 earnings on February 6th, 2025. Here is a reminder of the guidance:

• Net sales are expected to be between $151.0 billion and $155.5 billion, or to grow between 5% and 9% compared with first quarter 2024. This guidance anticipates an unusually large, unfavorable impact of approximately $2.1 billion, or 150 basis points, from foreign exchange rates. Also, as a reminder, in first quarter 2024 the impact from Leap Year added approximately $1.5 billion in net sales.

• Operating income is expected to be between $14.0 billion and $18.0 billion, compared with $15.3 billion in first quarter 2024.

• This guidance assumes, among other things, that no additional business acquisitions, restructurings, or legal settlements are concluded.

Here are some key areas to watch in the upcoming report.

Tariffs and Amazon's China Exposure

The Trump administration's tariffs on Chinese goods has once more added complexity to Amazon's cost structure and supply chain. Amazon's huge third-party (3P) marketplace — estimated to represent about 65% of the company's gross merchandise volume (GMV) — is closely linked to Chinese sellers.

In response to the tariffs, Amazon has already cancelled orders from a number of Chinese suppliers in a bid to defend margins. But that could result in product shortages and logistical bottlenecks. While Amazon's size should enable it to secure more advantageous supplier terms, the ripple effect on both first-party and third-party ecosystems could be profound and ultimately push consumer prices higher.

Relief as Dollar Weakens

Amazon's global presence exposes it to foreign exchange pressures. For Q4 2024, the firm reported a $900 million negative impact due to the strength of the U.S. dollar. With international markets accounting for nearly 23% of Amazon's total revenue, the company stated that its Q1 2025 guidance factors in a $2.1 billion headwind from foreign exchange rates.

U.S. Dollar Index (DXY) is down 8.2% year-to-date — predominantly due to tariffs, investor avoidance of U.S. assets, and increasing recession concerns. The downtrend in the DXY began when the Trump administration announced tariffs on February 2nd and has continued through to the present. We believe that the forex pressures factored into Amazon's conservative guidance will likely be surpassed in the upcoming earnings due to the significant weakening of the US dollar against major foreign currencies.

US Dollar Index (DXY) year-to-Date chart indicating a downtrend since early February, source: marketwatch DXY chart

Consumer Sentiment Weakness

U.S. consumer confidence continues to decline, adding another layer of complexity. The University of Michigan's Consumer Sentiment Index plummeted to 52.2 in April from 57.0 in March, the lowest level since mid-2022. Consumers are citing rising prices, concerns over job security, and uncertainty around tariffs and economic growth as key factors behind the decline in sentiment.

University of Michigan's Consumer Sentiment Index: Last 10 Years Chart, source: UMich surveys of consumers

For Amazon, which depends on discretionary spending to fuel its business, weaker consumer sentiment could dampen sales, particularly in higher-margin categories like electronics, home goods, and luxury items.

AWS Growth Trajectory

Wall Street expects Amazon Web Services to report low double-digit revenue growth in Q1 2025, marking a slowdown from its historic growth rate of 30% to 40%. AWS remains a crucial component of the business, with operating margins exceeding 25%, far surpassing those of Amazon's core retail operations.

Competition with Microsoft Azure and Google Cloud is intensifying, particularly as companies become increasingly sensitive to costs and shift towards hybrid cloud solutions. Investors will closely monitor AWS margins — any compression in margins would raise concerns about Amazon's operating leverage and its ability to cross-subsidize other business units.

Wells Fargo recently released a note stating that Amazon has halted its datacenter lease signings, which signals a potential cutback in Amazon's cloud growth. Amazon's upcoming earnings call will provide more clarity on this potential cutback.

CNBC: Pressure on AI trade amid reports Amazon pausing datacenter leases

Retail Advertising Spend

Amazon's ad business brought in $56.2 billion in 2024, accounting for about 8.8% of overall net sales of $638 billion. While concerns have been raised about decreased ad spend during economic uncertainty, Google's latest earnings indicate that ad spending is holding up — an encouraging early indicator of Amazon's ad segment performance this quarter.

According to WSJ, the stock’s average target price is $248.71. Stay tuned to our Mag 7 coverage for more updates.