Weekly Buzz: Big Tech has something to prove

Four of the Magnificent Seven – Meta, Microsoft, Apple, and Tesla – will deliver their quarterly earnings this week. The stakes are high: together, this quartet accounts for about 16% of the S&P 500’s valuation, which means their results can have a big impact.

What’s going on here?

Investors have been rotating out of Big Tech so far this year, favouring small and mid-sized companies. The issue is spending: these four hyperscalers alone are expected to pour over $470 billion into AI infrastructure this year, up from $350 billion in 2025. Profits, meanwhile, are growing at their slowest pace since 2022, at about 22%.

• Meta and Microsoft are feeling the pressure. The market wants proof that their spending on AI and data centers is generating real returns. Big spending is one thing, demonstrating profitability is another.
• Apple is playing its own game. Rather than sinking tens of billions into proprietary AI models, it's partnered with Google's Gemini for its Siri overhaul. Wall Street will be watching for a possible rebound in iPhone sales.
• Tesla trades at nearly 200 times estimated profits – the second most expensive stock in the S&P 500 – so investors are looking beyond vehicle sales to the company’s next big thing: the rollout of its long-awaited robotaxis.

What’s the takeaway for investors?

"Buy America" has been the default for decades, with US markets outpacing most others. But rich stock valuations, a ballooning government deficit, geopolitical tensions, and competitive opportunities elsewhere are making investors question that habit. This round of earnings will set the tone ahead.

As the world's largest and most liquid market, the US remains central to any global portfolio. Broad exposure across regions, however, means you’re in position to capture both America’s growth and opportunities around the world.

(If you’re looking for a portfolio that’s invested globally, check out General Investing.)

In Other News: US consumers are feeling less confident

Consumer confidence in the US just slipped to its weakest level since 2014. The Conference Board's Consumer Confidence Index dropped to 84.5 in January from 94.2 in December, well below forecasts. US companies depend heavily on the American consumer, so when confidence dips, demand often follows.

Survey respondents flagged inflation, groceries, and gasoline as key points. Tariffs, trade, and the job market also featured prominently. In other words, the mood is souring on both prices and paychecks, not just one issue. Expectations shape behaviour, so a prolonged pessimistic streak can become self-reinforcing: weaker spending leads businesses to pull back on hiring and investment, which then weighs further on sentiment.

Stubborn inflation could complicate the outlook: if prices keep rising, it will be harder for the Federal Reserve (Fed) to cut interest rates. One data point doesn't make a full verdict, but the central bank will be paying close attention – weak confidence could tip the scales toward rate cuts to stimulate the economy, even if inflation hasn't fully cooled.

These articles were written in collaboration with Finimize.

Hyperscalers are a short-hand for tech giants with massive cloud computing and data centre operations. The term typically refers to companies like Microsoft, Amazon, Google, and Meta, whose infrastructure can scale to serve billions of users worldwide.