Investors reacted favorably to earnings reports from major US technology companies last week, finding some comfort against concerns about President Donald Trump’s shifting trade policies. Reports from the largest firms eased fears of a broader market downturn or a direct tariff-induced profit slump on the near horizon.
One after another, tech giants largely exceeded market forecasts. Microsoft reported strong earnings and revenue gains, fueled by cloud computing and artificial intelligence services, and guided higher for the current quarter. Meta Platforms also beat expectations for both earnings and revenue, showing continued user growth and raising capital spending targets.
Not all reports were met with enthusiasm. Apple exceeded estimates for its fiscal second quarter, but share price retreated amid concerns over potential tariff costs, with the company forecasting hundreds of millions in added expenses. Amazon.com reported earnings that beat views, but its revenue guide for the current quarter fell lower, and its cloud services growth slightly missed targets. Block, the parent company of Square, missed on both top and bottom lines, partly due to slower bitcoin-related activity.
The potential impact of tariffs was a clear theme in some sectors. Beyond Apple's forecast, General Motors and Stellantis, the parent of Chrysler and other brands, adjusted guidance or scaled back imports due to tariff-related uncertainties and expected costs. Conversely, Howmet Aerospace, an aerospace supplier, reported strong earnings and indicated plans to pass tariff-related costs to customers.
Mixed economic data provided a backdrop to the earnings season. The April jobs report initially showed strength with new job additions and steady unemployment, though downward revisions to prior months offset some gains. Gross Domestic Product declined in Q1, a contraction linked by some analysts to a surge in imports as businesses stocked up ahead of expected tariffs.
Other sectors also reported. Travel companies like Royal Caribbean, Booking Holdings, and Hilton posted solid earnings, suggesting consumer spending on experiences remains resilient despite broader economic uncertainties. Payment processors Visa and Mastercard delivered strong results, reporting robust consumer spending. PayPal Holdings beat earnings forecasts but missed on revenue.
The market rally extended, pushing the S&P 500 and Nasdaq composite above key moving averages. This movement came as some investors took a benign view of tariff news and linked market gains to hopes for trade negotiation outcomes. Market Runs higher reflected this sentiment.
Investor concerns about a worst-case scenario eased, a notable contrast to past periods of tech volatility where even long-standing companies like Yahoo faced significant challenges. While some companies faced specific headwinds like Take-Two Interactive's delay of a major video game release or Super Micro Computer missing preliminary figures, the overall earnings picture from big tech provided a measure of stability. Apple hit by downgrades tied partly to tariff concerns served as a reminder of the potential impacts.
Bitcoin rallied amid a market return to risk, affecting companies like Robinhood, which saw crypto trading revenue double but still fell after earnings, and Strategy, a large bitcoin holder, which reported a wider loss but saw its stock rise with the cryptocurrency gain.
