US results season preview: Tesla among tech names in focus
Quarterly reporting picks up pace this week with some of the big technology companies ready to publish latest figures. Graeme Evans examines expectations.
21st October 2025 15:58
by Graeme Evans from interactive investor
Tesla’s emblem seen amid raindrops on a car in Krakow, Poland. Photo: Beata Zawrzel/NurPhoto via Getty Images.
A $4 trillion (£3 trillion) Apple Inc (NASDAQ:AAPL) valuation and near all-time peak for the S&P 500 index today highlighted Wall Street’s lofty expectations heading into the first of the Magnificent Seven results.
The opening week of the US reporting season, which featured 58 companies accounting for 17% of the index by earnings, showed another robust earnings performance.
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Bank of America analysts said that 76% of companies delivered a beat on earnings per share (EPS), which is better than the first week average of 68% and ahead of the previous quarter’s 73%.
The big banks posted beats across the board and reiterated bullish themes such as consumer resilience, strong deal pipelines and regulatory tailwinds.
Valuations in the sector failed to benefit, however, after two regional banks flagged one-off loan issues and JP Morgan boss Jamie Dimon warned of “probably more” credit cockroaches.
Wall Street markets fell sharply on Thursday but have since recovered on hopes of an end to October’s government shutdown and a potential thawing of US-China trade relations.
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Strong iPhone 17 sales helped Apple shares to open today’s session at a record high, while the S&P 500 index consolidated the previous session’s 1.1% rise in early dealings.
The reporting season picks up pace this week, starting with Netflix Inc (NASDAQ:NFLX) tonight and Tesla Inc (NASDAQ:TSLA) the following evening.
In aggregate, financial data company FactSet said that Magnificent Seven companies are expected to report year-over-year earnings growth of 14.9% for the third quarter.
Excluding the seven, the blended earnings growth rate for the remaining 493 companies in the S&P 500 would be 6.7% for the quarter.
However, FactSet points out that only one company from the band of mega-cap stocks is expected to be among the top five contributors to earnings growth for the S&P 500 in the third quarter.
The top five in order of contribution are NVIDIA Corp (NASDAQ:NVDA), Boeing Co (NYSE:BA), Eli Lilly and Co (NYSE:LLY), Intel Corp (NASDAQ:INTC) and Micron Technology Inc (NASDAQ:MU), with the middle three stocks the beneficiaries of softer comparisons.
The Magnificent Seven comfortably beat Wall Street forecasts in the second quarter by reporting growth of 26.6% as all seven companies delivered positive EPS surprises for the quarter.
Microsoft Corp (NASDAQ:MSFT) is due to report earnings for the first quarter of its financial year on Tuesday 28 October, with the third-quarter figures of Google owner Alphabet Inc Class A (NASDAQ:GOOGL) the following evening.
Bank of America is upbeat heading into the Microsoft figures, having seen the stock lag the Nasdaq since the previous quarter’s results.
It said: “AI infrastructure momentum away from Microsoft (to Oracle Corp (NYSE:ORCL)) seems to be weighing on sentiment. Again, we are bullish on upward revisions to Microsoft's capital expenditure, which would likely be a catalyst for the stock.”
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It has maintained a $640 price target, representing a potential upside of 24%. “We believe that Microsoft is well positioned to participate in the AI cycle in both the application and infrastructure markets.”
The bank also has a Buy stance on Alphabet, having yesterday lifted its price target to $280 as it looks to reflect the expansion of multiples across the wider market. It said: “Another quarter of stable search growth and strong cloud backlog growth could reinforce confidence in AI execution”.
Across the earnings season, Bank of America said its focus will be on any cracks in confidence after corporate guidance improved substantially in second quarter results.
It notes that inventories built up prior to August’s reciprocal tariffs are running low, suggesting that margin pressure could mount in the fourth quarter.
The bank added: “Even if the latest escalation on tariffs for China does not hit, the impact from actual tariffs in play for the past few months may be ahead of us. Pre-ordering mitigated part of the impact so far, but won’t last forever.”
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