The last time information technology firms prepared to report earnings, the industry faced sudden turmoil. Nvidia (NVDA) took a huge charge on export restrictions, and Apple (AAPL) was loading iPhones onto planes to avoid 145% U.S. levies on products made in China. Shares across the sector were in free fall.
Three months later, it's not as if tariffs aren't an issue; they're just less dominant, and market participants seem more sanguine about the issue. The United States and China reached a framework trade deal designed to keep rare earth materials flowing from China across the Pacific while bringing U.S. tariffs on Chinese goods down to 30%. That's still challenging for U.S. tech firms that depend on China for production and materials but is a lot less onerous than the massive April level previously discussed. Meanwhile, President Trump recently threatened heavy tariffs against Japan, South Korea, Canada, and the European Union, but an August 1 deadline means there's time left to negotiate.
Less negotiable—and somewhat unnerving for tech investors—is a separate 50% tariff on copper imports that also faces the August 1 deadline. This move, if enacted, could hurt laptop computer and semiconductor makers.
Earnings over the next few weeks from tech giants, such as Microsoft (MSFT), Apple, IBM (IBM), Texas Instruments (TXN), and others, could provide insight into how companies see the tariff landscape from here. In the first quarter, many were reluctant to provide guidance. While uncertainty around trade hasn't vanished, it's a little less hazy, and these upcoming earnings reports may give investors a chance to recalibrate.
"Technology sector earnings are expected to remain strong throughout this year," said Liz Ann Sonders, chief investment strategist at Schwab, in her second-quarter earnings season update with Kevin Gordon, director, senior investment strategist at Schwab.
Consensus is for the S&P 500® information technology sector to post second-quarter earnings growth of 17.7%, down from 18.1% in the first quarter. However, the strong first quarter might be discounted slightly because it likely reflected "pull-forward" demand as tariff policy loomed. For the full year, consensus is for 16.9% info tech earnings growth, down from 21.5% in 2024. This likely reflects both tough comparisons and the "law of large numbers" that makes it difficult for companies to build on already massive growth.
This quarter, numbers on the spreadsheets might matter less to investors than company outlooks, though naturally any earnings beats or misses could have an impact.
"Guidance and earnings surprises will take on heightened importance as markets remain sensitive to forward-looking commentary, especially amid policy uncertainty and instability related to trade, tariffs, and interest rates," said Gordon.
The second quarter was volatile for tech stocks, to say the least. Some of the largest companies including Nvidia, Broadcom (AVGO), and Microsoft fell dramatically after Trump's April 2 "reciprocal tariffs" announcement but climbed to all-time highs by June. Apple recovered from its tariff lows but didn't join the others in probing record peaks, possibly reflecting disappointment over delays to its AI program. Microsoft and other major cloud firms—including Amazon (AMZN), which isn't technically a tech sector stock—continued their big-spending ways on AI chips, helping the semiconductor segment recover from early 2025 softness.
"In terms of tariffs' impact on companies' bottom lines, we can say so far, so good," Schwab's Sonders said. "In fairness, second-quarter results are unlikely to incorporate the full tariff effect, given the many pauses that were enacted for certain countries and sectors, as well as the fact that the effective U.S. tariff rate hadn't yet reached double digits by the end of May."
Still, overall S&P 500 guidance for the second quarter improved in the weeks leading up to earnings season, giving tech investors some reason to hope for a strong performance.
"Most of the jump in positive guidance has been driven by the technology sector, which has nearly 30 companies issuing positive guidance for the quarter," Gordon noted.
Major tech companies scheduled to report in coming weeks include Texas Instruments on July 22, IBM on July 23, Intel (INTC) on July 24, Microsoft on July 30, Apple on July 31, and Advanced Micro Devices (AMD) on August 5. Nvidia, Cisco (CSCO), and Salesforce (CRM), report later in August; Broadcom reports in early September.
Other tech-related earnings to watch include cloud providers Alphabet (GOOGL) on July 23 and Amazon on August 7. Both companies spend heavily on chips, so their earnings could shape semiconductor business trends. The same goes for Meta Platforms (META), which reports July 30.
Also, keep in mind that strong margins in the semiconductor industry contribute heavily to analysts' earnings growth expectations. In fact, overall expectations for tech would be in the single digits if this segment wasn't included. That means overall growth is far slower in areas like software, technology hardware, and storage. In other words, investors whose portfolio includes certain tech stocks but not any chipmakers might see far less earnings growth potential.
Many keystone tech products like the iPhone and Microsoft Windows generate huge revenue but relatively slow growth compared to items like Microsoft's Azure cloud and Nvidia's AI chips. And in the chip sector, participants are likely watching to see if companies like Advanced Micro Devices, Broadcom, and Marvell (MRVL) can make inroads on Nvidia's AI chip dominance.
Meanwhile, software companies like Palantir (PLTR), Workday (WDAY), and Salesforce are under scrutiny amid ideas that software might not be as heavily affected by tariffs as many chip and cloud firms.
And overall, investors are likely watching margins not just in tech but throughout the S&P 500 to see if tariffs are starting to hurt profits. The second quarter was arguably the first one in which any real tariff impact existed, compared to mere threats of tariffs that occurred prior to Trump's April 2 announcement. Although tariffs and deadlines have been fluid since then, the general level was near 15% for the second quarter, well above first-quarter levels.
Besides tariffs' potential impact, here are three things to watch as tech firms report.
1. Cloud lifting? The cloud market slowed late last year but revived in the first quarter, for the most part. Year over year in the company's fiscal third quarter that ended March 31, Microsoft's Azure cloud business climbed 33%, a sequential improvement from 31% in the previous quarter. Amazon Web Services, the biggest cloud business, however, saw a sequential slowdown to 17% growth in the company's first quarter from 19% in the fourth quarter, implying that Microsoft may be gaining on its bigger cloud competitor. And Alphabet's cloud revenue grew 28%, a bit below analysts' estimates. Those big-three cloud companies face high expectations for the coming quarters, and they'll be watched closely by tech investors, who've hitched a ride on chip stocks like Nvidia, AMD, and Broadcom that tend to be the beneficiaries of data-center spending. And if global economic growth slows due to tariffs or other geopolitical stress, it could slow cloud demand, putting pressure on these businesses used at Amazon, Alphabet, IBM, Oracle, and Microsoft.
2. AI spending: Heavy first-quarter spending by "hyperscalers" like Microsoft, Amazon, Meta Platforms, and Alphabet continued to defy analysts' predictions of a slowdown. Alphabet said in its last earnings call that it expects capital expenditures of about $75 billion this year. Microsoft's spending on AI infrastructure reached $16.75 billion in its fiscal third quarter, up nearly 53% from a year earlier. "Demand is growing a bit faster," Microsoft CFO Amy Hood said on the call in April, CNBC reported at the time. "Therefore, we now expect to have some AI capacity constraints beyond June." One question every quarter regarding AI spending is whether investors should see it as positive or negative. That's especially true with tariffs causing so much economic uncertainty. So far, data center firms seem convinced they must keep growing their infrastructure to keep up with their competitors, but the impact could end up hurting bottom-line growth. Keep in mind that some of the heavy spending on data centers depends on resilience in the advertising businesses of companies like Meta and Alphabet. If a slower economy or AI competition hurts ad demand, that could ultimately take a bite out of AI capital expenditures by those firms and likely filter down into AI chip market growth.
3. U.S. dollar weakness: Few sectors have as much international exposure as tech, and that's been a hindrance regarding foreign exchange for years. A strong dollar over the last decade frequently sliced earnings for companies with huge overseas operations. With the dollar down 10% against other major currencies so far this year (and suffering its worst first-half in decades), this could be changing. The so-called Magnificent 7—some of them in tech and others with tech-related businesses—could stand to benefit. Companies in this arena with the most exposure to overseas markets include Meta, Apple, Nvidia, Alphabet, and Microsoft.
For the major tech firms reporting this week and next, analysts currently expect the following, though these numbers are subject to change as earnings approach:
AAPL: EPS of $1.43, up 2.1% from a year earlier, on revenue of $89.1 billion, up 3.85% year over year
GOOGL: EPS of $2.17, up 14.8% from a year earlier, on revenue of $93.8 billion, up 10.7% year over year
MSFT: EPS of $3.37, up 14.2% from a year earlier, on revenue of $73.8 billion, up 14% year over year
META: EPS of $5.88, up 13.9% year over year, on revenue of $44.7 billion, up 14.3% year over year
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