Why Thursday Could Be a Big Day for the Stock Market

This year has been a volatile one thus far for the stock market. The so-called "Great Rotation" out of software and artificial intelligence (AI) stocks, the ongoing war with Iran, and the resulting surge in oil prices have given investors a lot to digest. Despite the resulting uncertainty, investors recently piled back into stocks, driving the S&P 500 and Nasdaq Composite to new heights.

However, the stock market faces a key hurdle later this week, as four of the Magnificent Seven stocks will report quarterly results -- all on the same day. This will give investors key insight into where the market goes from here. Let's look at what Wall Street expects and what it means for investors.

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Alphabet

It's been a busy few months for Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG), which will come to a head when the company reports its first-quarter results after the market close on Wednesday.

The search giant inked a new five-year AI chip deal with Broadcom (NASDAQ: AVGO) to create future versions of its Tensor Processing Units (TPUs). These custom chips have been a big hit with Google Cloud's customers, particularly those looking for price flexibility.

Alphabet is also reportedly poised to invest another $40 billion in AI start-up Anthropic, building on its existing 14% stake. Anthropic's Claude has emerged as one of the most impressive AI models, and the company could go public as early as this year -- resulting in a windfall for Alphabet investors.

Heavy investment in capital expenditures (capex), primarily in the servers and data centers needed for AI, is expected to weigh on Alphabet's bottom line. Wall Street is forecasting revenue of $107 billion, up 19% year over year, resulting in earnings per share (EPS) of $2.67, down 5%.

Meta Platforms

Meta Platforms (NASDAQ: META) is scheduled to report its Q1 results after the market close on Wednesday, and investors will be watching closely. Meta stunned onlookers in recent days as the company will reportedly lay off 10% of its workforce, or roughly 8,000 employees. This could have a significant impact on Meta's profits.

The company also released its newest AI model earlier this month. The model, Muse Spark, was revamped from the ground up and became an immediate hit with users. Investors will be looking for updates on how this will position Meta for the future.

Analysts' consensus estimates call for revenue of $55.57 billion, up 31% year over year, and EPS of $6.65, up just 3%, reflecting heavy capex spending.

Amazon

Amazon's (NASDAQ: AMZN) first-quarter results will be unveiled after the market close on Wednesday, following an action-packed quarter. The stock took a hit three months ago when the company unveiled plans to spend a massive $200 billion in capex this year.

However, in Amazon's annual shareholder letter, CEO Andy Jassy argued the sell-off was premature. He said the company's AI chips business alone has a run rate of $50 billion, growing at more than 100% annually. He went on to say that Amazon already has customer commitments for nearly all of this year's capex investment.

Furthermore, the company announced plans to acquire satellite operator Globalstar for $10.8 billion. This move furthers Amazon's satellite-to-cellphone service, which is expected to launch in 2028. This would give the company another way to interact with users on a daily basis.

Wall Street is calling for revenue of $177 billion, up 14% year over year, and EPS of $1.65, up just 4% -- because, you guessed it, AI spending.

Microsoft

Fears about the so-called "software apocalypse" drove Microsoft (NASDAQ: MSFT) lower, amid concerns that recent advances in AI could render its software business obsolete. The company will provide critical information after the closing bell on Wednesday, when it reports results for its fiscal 2026 third quarter (ended March 31).

Reports suggest Microsoft's pivot to sell Copilot -- rather than including it for free in software bundles -- has been wildly successful, with the company meeting "audacious" sales goals last quarter, according to Bloomberg. This would help calm investors' fears about the future of AI.

Microsoft also revised its partnership with OpenAI, imposing a cap on payments it receives from the AI start-up. Moreover, its license for OpenAI's products will no longer be exclusive.

Analysts' consensus estimates are calling for revenue of $81.4 billion, up 16% year over year, resulting in EPS of $4.06, up 17%.

Investors will be watching

Any one of these tech stocks could move the needle, but together they could have a pronounced effect on the market. Taken together, Microsoft, Amazon, Meta Platforms, and Alphabet account for more than 18% of the S&P 500, so investors will be watching the proceedings closely for insight into the future of technology and the market trajectory in general.

Danny Vena, CPA has positions in Alphabet, Amazon, Broadcom, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Broadcom, Meta Platforms, and Microsoft. The Motley Fool has a disclosure policy.