Soaring AI capital expenditures weigh on sentiment; Meta, Apple, and Amazon earnings previews

By Fiona Cincotta Edited by Wu Haishan

Following Alphabet's sharp stock decline amid a surge in capital expenditures, investors are now focused on earnings reports from Meta and Amazon. Apple’s results are also drawing significant attention, as the world’s most valuable company trades near an all-time high.

Meta is expected to report second-quarter earnings after the market close on July 29. Earnings per share are forecast at $7.18, with revenue of $60.2 billion, up 26% year-over-year.

The market expects the company to deliver another quarter of advertising growth, driven by AI-powered ad targeting and user engagement.

Although Alphabet posted strong revenue growth after raising its capital expenditure guidance, its stock fell 7%. Investors will closely watch whether Meta’s accelerated spending on AI infrastructure is outpacing its revenue growth.

As investors begin showing signs of impatience, the focus will be on whether Zuckerberg can convince the market that massive AI investments will translate into higher future returns—not just rising costs.

Meta may raise its capital expenditure guidance from the current range of $125 billion to $145 billion to a new range of $135 billion to $150 billion, reflecting further increases in costs related to AI infrastructure and memory.

Advertising remains Meta's core profit driver. The market will watch whether ad impressions continue to grow, whether average revenue per ad remains stable or rises, and whether AI-powered recommendations boost user engagement and successfully monetize it.

User metrics—including daily active users and engagement across Instagram, Facebook, WhatsApp, and Threads—remain important, though they are now less influential for stock price performance than AI-related spending and monetization capabilities.

The company’s guidance will also be closely scrutinized, particularly Meta’s Q3 revenue outlook and commentary on AI infrastructure spending. Evidence that AI investments are improving ad targeting, engagement, and monetization would support bullish arguments. Conversely, if spending rises without a clear improvement in profitability, it could trigger a market reaction similar to Alphabet’s.

On the weekly chart, Meta encountered resistance at its all-time high of $793 in August 2025 and has since traded within a descending channel. Price has broken below the 50-day moving average but remains above $514.

A break below that level would reinforce the bearish trend. Bulls need to push prices above $676 to breach the upper boundary of the downtrend channel and surpass July’s high to establish a higher high, potentially targeting the $750 resistance level and then the recent peak at $793.

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After Apple reported 17% year-over-year revenue growth to $111.2 billion and 22% EPS growth to $2.01 in the January–March quarter, market expectations have risen. As a result, even a slight miss may not materially alter investors’ outlook on the company.

The iPhone remains the company's most important product. In the last quarter, iPhone revenue rose 22% to $57 billion, driven by stronger demand for Pro models. Apple also reported record upgrade volumes and an active installed base exceeding 2.5 billion devices.

Pent-up demand from prior supply constraints may provide some support for iPhone sales in the third quarter, although rising component costs remain a risk. Investors will also watch whether Apple has sufficient pricing power to offset these higher costs.

China remains another key area of focus. Greater China revenue for the January–March quarter grew 28% to $20.5 billion, and IDC estimates Apple’s smartphone shipments rose 24.4% in the April–June quarter—encouraging figures amid intense competition from Huawei, Xiaomi, and other domestic players.

Services revenue for the January–March quarter increased 16% to $31 billion, with a gross margin of 76.7%, compared to 38.7% for products. These figures highlight the importance of the services segment to Apple’s overall profitability.

Apple indicated that, on a constant-currency basis, services growth in the third quarter would remain roughly flat. Investors expect continued growth in the App Store, advertising, subscriptions, cloud services, and payments, along with accelerating growth in paid subscriptions and transaction accounts.

Apple’s R&D expenses rose 34% in the January–March quarter to $11.4 billion, as the company continues developing its own artificial intelligence models while collaborating with Google under a multi-year Gemini partnership.

Earlier this year, investors hoped for confirmation that Apple had a compelling AI strategy. The focus has now shifted to whether AI can accelerate the iPhone upgrade cycle and deepen user engagement—not merely become another source of cost inflation.

Apple’s stock has maintained its long-term uptrend, consistently trading above its ascending trendline and both the 50-day and 200-day moving averages, encountering resistance this week near its all-time high of $333.

A breakout above this level could open a path toward $350, with $400 emerging as the next long-term upside target. The $280 area warrants attention—if breached, it would form a lower low and point toward the 2026 low near $250.

Amazon will report its second-quarter earnings after the market closes on July 30. Earnings per share are expected to be $1.82, with revenue of approximately $100 billion.

Amazon Web Services will remain in focus, as the segment posted 28% year-over-year revenue growth in the first quarter—the fastest pace in nearly four years. Investors will keenly watch whether AWS can continue keeping pace with Microsoft Azure and Google Cloud in the artificial intelligence race.

Amazon has already outlined roughly $200 billion in capital expenditures for 2026, and investors will closely monitor whether that figure increases further.

Beyond cloud revenue, investors will also assess whether heavy investments in AI infrastructure have started to squeeze AWS’s operating profit.

North American retail operations will also be under close scrutiny, with e-commerce sales growth, Prime Day performance, and retail operating margins all drawing attention. A resilient consumer-facing business could help alleviate concerns tied to AI-related investments.

Advertising has become one of Amazon’s fastest-growing and most profitable segments. Sustained double-digit growth would provide another positive catalyst for the stock price.

Since 2023, Amazon has been in a strong uptrend, forming a series of higher highs and higher lows, ultimately encountering resistance at its all-time high of $278. The stock has since pulled back and is now testing its 50-day moving average near $233.

As shown in the chart, a break below the 50-day moving average would target $208—the location of the ascending trendline—followed by the psychological level of $200. A breach below this level would reinforce the bearish outlook.

If the stock holds above the 50-day moving average, the overall uptrend remains intact, and bulls will aim for $258 before seeking a recovery toward the all-time high of $278.

(This article is originally contributed by a senior analyst at FXCM Group and represents the author's personal views only, not those of the publication.)

据图所示，若跌破50日均线，将看向208，即上升趋势线所在位置，之后就是心理关口200。跌破该关口将强化看跌前景。

如果继续守住50日均线，整体上涨趋势依然保持不变，多头将看向258，随后寻求回升至278美元的历史高点。

（本文系嘉盛集团资深分析师原创供稿，文章仅代表作者个人观点，不代表本刊立场。）

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