Microsoft, Alphabet, Amazon Earnings Meet Fed Rate Decision: 3 Charts To Watch This Week

Microsoft and Alphabet report earnings Wednesday, followed by Amazon on Thursday, with investors watching for fresh clues on the AI trade.

• South Korea’s SK hynix is also slated to report earnings this week.
• The firm’s management outlook could impact sentiment toward memory stocks, including Micron and Sandisk.
• Meanwhile, the Federal Reserve will announce its policy decision on Wednesday.

Microsoft (MSFT), Alphabet (GOOG, GOOGL) and Amazon (AMZN) are slated to report earnings this week, with investors looking for more clues on where the AI trade is headed.

Meanwhile, the Federal Reserve will announce its policy decision on Wednesday, with third-quarter (Q3) GDP and September inflation data due Thursday morning.

Here are three charts to track as the market unfolds this week.

Big Tech Earnings Put AI Returns Under Scrutiny

Microsoft and Alphabet shares have taken divergent paths since July, and their upcoming earnings reports will give investors another chance to assess their growth and spending plans. Microsoft has led the group in the chart above, while Alphabet and semiconductor stocks tied to its infrastructure spending have lagged.

The question for investors is no longer simply whether demand for AI is growing. They also want to know how much companies must spend to capture that demand, how quickly the investments will generate returns, and how they plan to finance the buildout.

Meta Platforms (META) offered a recent example of how quickly sentiment can change. The company beat revenue estimates last Wednesday, but its shares fell almost 8% on Thursday after it unveiled a new class of nonvoting Class C shares.

Microsoft is expected to report earnings per share (EPS) of $4.72 and revenue of $90.75 billion, as per Koyfin data. Investors will be watching Azure growth numbers and whether demand can support the company’s infrastructure investments. Microsoft guided in July to Azure growth of about 45%. 

Amazon’s AWS business faces a similar test when the company reports Thursday. Wall Street is expecting EPS of $1.96 on revenue of $202.20 billion. The growth of its cloud business will also be in focus. 

MSFT stock edged 0.5% higher in premarket trade on Monday. On Stocktwits, retail sentiment around the firm has trended in ‘bearish’ territory over the past week. Meanwhile, AMZN stock edged 0.3% higher, with retail sentiment around the shares falling to ‘neutral’ from ‘bullish’ territory over the past day.

Meanwhile, Alphabet had faced scrutiny after raising its capital expenditure outlook in July, despite beating earnings estimates. Another jump in spending could test investors’ willingness to fund the AI buildout. The market is expecting EPS of $2.97 on revenue of $127.83 billion.

GOOGL stock moved 0.4% higher in premarket trade and saw retail sentiment on Stocktwits around the company flip to ‘bullish’ from ‘bearish’ over the past week.

SK Hynix Earnings Could Set The Tone For Memory Stocks

Memory stocks now trade at single-digit forward earnings multiples, suggesting investors are wary that the sector’s current profits may be near a cyclical peak. South Korea’s SK Hynix (SKHY) is expected to report its third quarter results Tuesday night. Wall Street consensus estimates on Koyfin peg revenue to come in at $74.81 billion.

While analysts expect another record quarter, investors will be looking out for management’s outlook as the more important variable. A substantial shareholder-return plan could provide a reason to own the stock beyond the AI growth story. Second, more cautious comments on high-bandwidth memory pricing or demand in 2027 could reinforce concerns that current earnings are difficult to sustain.

Lastly, competition from China’s ChangXin Memory Technologies (CXMT) and any commentary on the same could provide the market with greater visibility into demand in 2027 and 2028. 

SK Hynix’s earnings may also impact Micron Technology (MU) and Sandisk (SNDK) shares. The company’s comments on pricing, customer commitments and production capacity could influence sentiment toward both companies. 

SKHY stock jumped over 2% in premarket trade on Monday. On Stocktwits, retail sentiment around the firm remained in ‘bullish’ territory over the past day.

Fed Decision, Inflation Data Could Reset Rate Expectations

CME FedWatch data showed a 90% probability that the Fed will hold rates steady between 3.75% and 4.00% on Wednesday, putting the focus on its statement and any clues about the path of policy in December. 

However, the bond market is signaling concerns around the outlook for rates and inflation. Investors will be tracking the two-year Treasury yield around the decision. A more hawkish message could push short-term yields higher, while a statement that leaves the door open to easing could send them lower.

Long-term yields have eased from early October's highs, the highest since 2002, partly because falling stocks sent money into bonds. 

Week At A Glance

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