Weekly Buzz: Big Tech's big week 💪

5 minute read

As of 1 May, the S&P 500 has closed up for eight days straight. It’s a run which saw the index rise 8.6%, its longest winning streak since August 2024, and it’s another proof point for staying invested.

So, given that the Magnificent Seven tech firms have done a lot of heavy lifting for the S&P 500 over the past couple of years, you can bet that analysts were glued to their screens as Microsoft, Amazon, Meta, and Apple released their earnings reports this week. 

What’s going on here?

Analysts predict that the aforementioned four firms – alongside Alphabet (Google’s parent company), Nvidia, and Tesla – grew their earnings by about 20% last quarter. Signs are good so far: Microsoft, Meta, and Alphabet have all beat Wall Street’s expectations, each posting higher-than-expected revenues. To round things off, Nvidia will be releasing its report by the end of the month.

As a whole, earnings for companies in the S&P 500 are projected to have expanded by around 10% last quarter. If solid earnings shape up for the broader index, US stocks might see a more balanced and sustainable recovery after the volatility we’ve seen so far this year. 

Much of this depends on how the US economy holds up. Data out on Wednesday showed that US GDP shrank 0.3% in the first quarter – a sharp drop compared to the 2.4% growth of the previous quarter.

Despite the contraction, economists expect a rebound to around 2% growth in Q2. This optimism makes sense when you look closer at what drove the decline: a surge in imports as businesses rushed to stockpile goods ahead of tariffs. Imports subtract from GDP calculations, but they don’t necessarily signal underlying economic weakness. The larger impact – on businesses and consumers – will likely be clearer over the coming months.

What’s the takeaway?

All eyes are on whether America's tech giants can deliver strong earnings even as the broader economy cools enough to keep interest rate cuts on the table. This combination – corporate strength coupled with lower rates on the horizon – could be what's needed to build market optimism.

💡 Investors’ Corner: 2025 just proved why diversification matters

There’s a certain thrill in being invested in one company, sector, or theme. It feels decisive – and if your bet doesn’t pay off, at least you swung for the fences, right? But the risk with overconcentration is simple: your bet pays off only if your thesis – and timing – are exact. You aren’t just riding on a single investment, but on economic conditions, market sentiment, and more.

The real danger is that the journey can be so gut-wrenching that you bail when things get rough. Big drawdowns can spark emotional decisions, and the worst losses often come when investors exit at the bottom and miss the rebound. Staying invested beats going all-in only for the market to pivot elsewhere – and a diversified portfolio that can perform across different scenarios gives you the best shot at that.

We haven’t seen a market meltdown this year, but we have seen a reality check. When the Nasdaq and the Magnificent Seven dropped almost 20% due to tariff-related volatility, other assets quietly did their job. To use our General Investing portfolios as examples – because they’re invested in multiple regions and asset classes – diversification didn’t just soften the initial blow to US equities, it delivered gains.

(If you’re interested in a deep dive into our performance, check out our full Q1 2025 Returns.)

These articles were written in collaboration with Finimize.

🎓Simply Finance: Earnings and stock prices

While closely related, a company's earnings and its stock price don't always move in tandem. Share prices reflect investors' expectations about future earnings, not just current results. It’s why a firm can have a strong showing, but see its stock fall if it doesn’t meet expectations, or if its future outlook disappoints.