Wall Street bull calls for 11% rally in S&P 500 to end 2025 as trade 'uncertainty' subsides

Key Points

• Microsoft (MSFT) is set to report its fiscal Q4 earnings, with Wall Street expecting adjusted EPS of $3.37 and revenue of $73.89 billion, reflecting strong growth in AI and cloud sectors.
• The Intelligent Cloud segment, including Azure, is projected to reach $29.09 billion in revenue, a 22% increase, with AI sales contributing significantly to this growth.
• Google's recent strong Q2 results, driven by cloud revenue and a $10 billion AI investment increase, may signal positive trends for Microsoft's upcoming earnings.
• Analysts predict Microsoft's AI investments will peak in fiscal 2026, with AI-powered Copilot software seen as a potential growth driver.
• Microsoft's relationship with OpenAI faces challenges over equity and structural changes, which could impact OpenAI's $20 billion investment prospects.

Summary

Microsoft (MSFT) is gearing up to release its fiscal Q4 earnings, with analysts forecasting adjusted EPS of $3.37 and revenue of $73.89 billion, driven by robust growth in its AI and cloud businesses. The Intelligent Cloud segment, including Azure, is expected to hit $29.09 billion, a 22% rise, with AI sales playing a significant role. Following Google's strong Q2 performance, fueled by cloud revenue and a boosted $10 billion AI investment, optimism surrounds Microsoft’s potential for similar gains. However, while AI use cases are expanding in FY25, experts like Wedbush’s Dan Ives suggest FY26 will be the pivotal year for Microsoft’s AI growth, with tools like Copilot poised to drive future revenue. Despite a 21% year-to-date stock increase, Microsoft faces hurdles in its partnership with OpenAI, as disputes over equity and OpenAI’s restructuring into a public benefit corporation could jeopardize $20 billion in investments. This earnings report will be a critical indicator of Microsoft’s trajectory in the competitive AI landscape.

Key Points

• Meta (META) is set to report Q2 earnings with expected EPS of $5.89 and revenue of $44.83 billion, up from last year's $5.16 EPS and $39.07 billion.
• The company is heavily investing in AI, spending hundreds of billions on data centers like Hyperion and hiring top talent from OpenAI, Apple, and other tech firms.
• Advertising revenue is projected to increase by 15% to $44.09 billion, with early AI-driven ad improvements showing a 5% boost in conversion rates.
• Meta is expanding into AI-powered smart glasses, including Ray-Ban Meta and Oakley Meta, as part of its "personal superintelligence" mission.

Summary

Meta Platforms, Inc. (META) is gearing up for its Q2 earnings report, with analysts anticipating an EPS of $5.89 and revenue of $44.83 billion, a significant rise from last year’s figures. The company, under CEO Mark Zuckerberg, is aggressively investing in AI, spending hundreds of billions on multi-gigawatt data centers like Hyperion and recruiting top talent from OpenAI, Apple, and other firms to bolster its Superintelligence Lab. This AI push is already yielding results, with a 5% increase in ad conversion rates and a 15% expected rise in advertising revenue to $44.09 billion. Additionally, Meta is venturing into AI-driven smart glasses, including Ray-Ban Meta and Oakley Meta, aligning with Zuckerberg’s vision of "personal superintelligence" for all. While the hefty AI investments continue, early returns and Wall Street’s optimism—highlighted by BofA Global Research’s positive outlook on Meta’s AI integration into advertising—suggest potential revenue upside. Meta’s strategic focus on AI and innovative products positions it as a key player in the tech landscape, despite the stock’s recent 2.46% dip to $700.00 at close on July 29.

Key Points

• US and Chinese negotiators concluded two days of trade talks in Stockholm, Sweden, without an immediate announcement on further tariff delays, leaving markets anxious about potential duty increases set for August 12.
• Treasury Secretary Scott Bessent described the talks as "very constructive," with a possible 90-day tariff pause still under consideration, pending President Trump's final decision.
• Both sides discussed a range of issues, including semiconductors, rare earth minerals, and Chinese export controls, but did not plan a face-to-face meeting between Trump and Xi Jinping.
• Trump's team emphasized that tariff rates could revert to higher levels seen earlier this year if no agreement is reached, with the president holding the ultimate authority to decide.
• This meeting marks the third in recent months between US and Chinese trade teams, building on previous discussions in Geneva and London, with ongoing communication expected.

Summary

US and Chinese trade negotiators concluded two days of talks in Stockholm, Sweden, without a definitive announcement on extending a tariff pause, raising concerns as higher duties loom on August 12. Treasury Secretary Scott Bessent called the discussions "very constructive," hinting at a potential 90-day delay, though President Trump will make the final call. Topics ranged from semiconductors, including Nvidia's AI chip exports to China, to rare earth minerals and Russian oil consumption, but no plans for a Trump-Xi meeting were set. Trump's team warned that tariffs could revert to triple-digit levels seen earlier this year if no deal is reached. This third round of talks in recent months builds on prior meetings in Geneva and London, with both sides committing to ongoing dialogue. Meanwhile, Trump's broader trade agenda includes a new EU tariff pact and negotiations with other nations like India and Canada before a self-imposed deadline. Markets remain on edge, hopeful for a delay to avoid economic disruption, as analysts suggest a pause could stabilize investor sentiment. The outcome of these talks, alongside Trump's decisions, will significantly impact global trade dynamics and economic forecasts in the coming weeks.