Magnificent 7 Earnings Hinge On AI Payoff: Analyst Flags Top Risks

The Magnificent Seven earnings season is here, and while JPMorgan's Doug Anmuth expects strong results, the real test lies in 2025 outlooks.

With tougher comps, FX headwinds, and slowing growth, investors will be watching closely to see if these tech giants can sustain momentum.

AI Capex: Bet Big Or Go Home

The AI spending spree isn't slowing down. JPMorgan raised 2025 capex estimates for the big three – Amazon.com Inc (NASDAQ:AMZN) at $97 billion, Alphabet Inc‘s (NASDAQ:GOOGL) (NASDAQ:GOOG) Google at $62 billion, and Meta Platforms Inc (NASDAQ:META) at $64 billion – all exceeding consensus.

While these investments weigh on margins and free cash flow, Anmuth still anticipates margin expansion for Amazon and Google, while Meta’s growth appears more limited.

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Amazon: AWS Takes Center Stage

With AWS accelerating and GenAI becoming a bigger revenue driver, Amazon’s North American operating margins could expand by 6.6% in 2025, thanks to regionalization and automation, the analyst says.

Investors are looking for AWS growth of over 20% and operating income between $19 and $20 billion – key numbers that could drive stock movement.

Meta & Google: Monetization Is Key

Meta is leaning on AI-driven ad tools, Reels, and MetaAI to sustain 19-20% revenue growth (FX-adjusted), though FX could shave off around 100 basis points. Llama 4 is set to boost monetization, but expect higher capex and slight margin compression.

Meanwhile, Google’s YouTube ads, Search, and Cloud are expected to perform well in Q4, particularly post-holiday. While regulatory risks persist, investor sentiment appears to be improving.

The Verdict

Anmuth's top picks remain Amazon, Meta and Alphabet. Strong earnings may not be enough—investors need proof that AI investments will deliver actual returns.

Read Next:

• 2025 Stock Playbook: Tap Into AI’s $1 Trillion Potential, US Growth Opportunities

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