Microsoft Corporation develops and supports software, services, devices and solutions worldwide. The Productivity and Business Processes segment offers office, exchange, SharePoint, Microsoft Teams, office 365 Security and Compliance, Microsoft viva, and Microsoft 365 copilot; and office consumer services, such as Microsoft 365 consumer subscriptions, Office licensed on-premises, and other office services. This segment also provides LinkedIn; and dynamics business solutions, including Dynamics 365, a set of intelligent, cloud-based applications across ERP, CRM, power apps, and power automate; and on-premises ERP and CRM applications. The Intelligent Cloud segment offers server products and cloud services, such as azure and other cloud services; SQL and windows server, visual studio, system center, and related client access licenses, as well as nuance and GitHub; and enterprise services including enterprise support services, industry solutions, and nuance professional services. The More Personal Computing segment offers Windows, including windows OEM licensing and other non-volume licensing of the Windows operating system; Windows commercial comprising volume licensing of the Windows operating system, windows cloud services, and other Windows commercial offerings; patent licensing; and windows Internet of Things; and devices, such as surface, HoloLens, and PC accessories. Additionally, this segment provides gaming, which includes Xbox hardware and content, and first- and third-party content; Xbox game pass and other subscriptions, cloud gaming, advertising, third-party disc royalties, and other cloud services; and search and news advertising, which includes Bing, Microsoft News and Edge, and third-party affiliates. The company sells its products through OEMs, distributors, and resellers; and directly through digital marketplaces, online, and retail stores. The company was founded in 1975 and is headquartered in Redmond, Washington.

Microsoft Corporation

Key Points
Apple stock is cooling off after a rapid run-up in the second half of last year.
A Gemini-powered Siri upgrade could come in February.
Apple shares are far from cheap.
Less than one month into the new year, Apple (NASDAQ: AAPL) is already down 8.8% year to date at the time of this writing, compared to a 1% gain in the S&P 500 (SNPINDEX: ^GSPC).
That makes Apple the second-worst-performing component of the Dow Jones Industrial Average.
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Here's what's driving the sell-off, and if the mega-cap tech stock is a buy now.
Context is key
Always take context into account when evaluating a stock's performance within a specific window, such as year to date or a year.
Apple sold off in the first half of 2025 due to tariff-related fears of eroding margins that never came true. The stock then gained 32.5% in the second half of the year. So heading into 2026, the company had added more than $1 trillion in market cap in a matter of months.
The stock is still up big over the last seven months, even when factoring in its pullback so far this year. It's up to investors to decide how much of the gain is warranted.
Apple is making a splash with AI
On Jan. 12, Alphabet and Apple published a joint statement announcing the integration of Google's Gemini models and cloud technology into the next generation of Apple Foundation Models. Reports indicate that a Gemini-powered version of Siri could come as soon as February.
Having a voice-controlled artificial intelligence (AI) assistant is a brilliant move on Apple's part. Manually-controlled AI functionality may be off-putting to some users, but narrating commands to an assistant could make AI more approachable for users who aren't tech savvy. It's also a good way for the company to gradually phase in AI rather than launching big, overwhelming upgrades.
Apple is known for taking its time with product launches, which is something long-term investors can appreciate. Instead, it aims to maximize the overall impact of a product or a product line's life cycle.
And that was certainly the case last year with the iPhone 17, which featured significant improvements in its camera, processing, and design but lacked the AI showstopper that some investors wanted.
Still, the iPhone 17 came out in September 2025, and investors cheered strong demand and a return to meaningful earnings growth, which Apple had been lacking for years.
Fundamentals are improving
As you can see in the following chart, Apple's earnings soared during the pandemic as consumers shifted purchasing from services to products, but then stagnated. Its recent results have given its earnings and operating margins a much-needed jolt.
Apple's product revenue grew 4.1% in fiscal 2025, and services revenue jumped 13.5%.
For the fiscal year, products raked in a highly impressive 36.8% gross margin, but services were even better at 75.4%. And with services now making up 26.2% of total sales, margins could continue to expand.
Overall, Apple's results have been solid. And that's without factoring in the growth potential of what is likely to be a big calendar year for the company with AI-powered software upgrades and an iPhone purpose-built for AI integration, which may also feature its first-ever foldable design.
Higher-end versions of the iPhone 18 are expected to be powered by Taiwan Semiconductor Manufacturing's 2-nanometer chips, which will make it by far the most expensive iPhone ever, but will also drastically improve processing and battery life.
Apple's valuation is elevated
With earnings growth and margins improving, the stock may become more appealing to growth investors. But its valuation is expensive, given that analyst estimates have the company growing earnings by only 10.3% in fiscal 2026 and 10.5% in fiscal 2027.
Even after its recent sell-off, Apple has a 30.9 forward price-to-earnings ratio (P/E) -- which is more expensive than Amazon, Alphabet, Microsoft, and Meta Platforms. Even Broadcom, which is growing at a breakneck pace and is also high-margin, has a 31.6 forward P/E. And Nvidia -- which converts over half of its revenue into after-tax net income and is also growing at a breakneck pace -- has a forward P/E under 40.
I would choose every stock in that chart over Apple because they all have strong competitive moats and more attractive valuations relative to their growth potential. Another distinct difference between Apple and other major tech stocks is its business model.
Apple is heavily dependent on consumer spending. In fiscal 2025, it demonstrated remarkable resilience in its core North American market, and strong growth in Europe and Asia (outside of China).
But China sales declined, and it remains to be seen if U.S. consumers will continue paying higher prices for Apple's AI-integrated devices, especially given that the cost of living continues to outpace wage growth. By comparison, big tech companies that rely mainly on business-to-business sales aren't as sensitive to weakness in consumer spending.
Keep Apple on a watch list (for now)
Apple is a decent stock to buy in 2026, but it's not all that compelling. Investors can buy a high-octane growth stock like Broadcom for a similar valuation, or get far more balanced earnings growth from Microsoft, or high margins and solid earnings from Meta at a far less expensive valuation.
The slower a company's earnings growth, the more critical you should be of its valuation. And in Apple's case, it's somewhere between a tech stock and a consumer-facing company.
In terms of consumer-facing companies, I would much rather buy high-yield dividend stocks like Coca-Cola and Procter & Gamble, which are passive-income powerhouses at far more attractive valuations than Apple.
That said, investors who believe in Apple's ability to capitalize on AI may still want to consider buying Apple now. And if there is a sell-off in AI stocks or a pullback in hyperscaler spending on AI, I would expect Apple to hold up far better than companies that have been pouring capital into long-term AI investments. Apple has an impeccable balance sheet and consistently generates gobs of free cash flow, which it uses to buy back stock and invest in long-term projects.
In sum, there are worse ideas than buying Apple after its latest pullback, but it's not a screaming buying opportunity by any means.
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Daniel Foelber has positions in Nvidia and Procter & Gamble and has the following options: short February 2026 $150 calls on Procter & Gamble. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Salesforce, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Apple Is the Second-Worst-Performing Dow Jones Stock So Far in 2026. Is the Sell-Off a Buying Opportunity?

Key Points
Form 13Fs provide investors with a concise snapshot of the stocks Wall Street's savviest fund managers have been buying and selling.
Viking Global Investors' Ole Andreas Halvorsen completely exited his fund's positions in Nvidia and Amazon -- and profit-taking may explain only part of the story.
Meanwhile, Halvorsen scooped up over 2.4 million shares of a cash-generating powerhouse during the third quarter that's historically inexpensive.
Data is the fuel that keeps Wall Street's engine humming along. The issue for investors is that there's often more data available than they can possibly digest. Between earnings season -- the six-week period each quarter where most S&P 500 companies report their operating results -- and near-daily economic data releases, it's easy for something important to fall through the cracks.
For instance, investors might have overlooked the flurry of Form 13F filings in mid-November. A 13F is a required filing no later than 45 days following the end of a quarter for institutional investors with at least $100 million in assets under management. These filings intricately detail the stocks Wall Street's brightest money managers bought and sold in the latest quarter (in this instance, the quarter ended Sept. 30).
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Although the newly retired Warren Buffett has long been the most-followed billionaire fund manager on Wall Street, he's far from the only billionaire investor known to make waves. For example, Viking Global Investors' chief, Ole Andreas Halvorsen, has a history of outperforming the stock market's major indexes.
But the biggest surprise you'll find in Halvorsen's fund, which is overseeing close to $39 billion in assets under management, is his approach with members of the trillion-dollar club. During the September-ended quarter, Halvorsen completely jettisoned his fund's stakes in artificial intelligence (AI) titans Nvidia (NASDAQ: NVDA) and Amazon (NASDAQ: AMZN), while making another trillion-dollar company a new top-five holding.
Viking Global Investors' billionaire boss shows Nvidia and Amazon to the door
For most billionaire investors, members of the "Magnificent Seven" are commonly held stocks. These are seven of the most influential businesses on Wall Street that possess one or more sustainable moats. But for Ole Andreas Halvorsen, two of these leading businesses were given the heave-ho.
During the third quarter, Viking Global's billionaire boss dumped all 3,897,092 shares of Amazon (previously the fund's eighth-largest holding) and sent all 3,681,935 shares of Nvidia (previously the 26th-largest holding by market value) to the chopping block.
Simple profit-taking may explain why Halvorsen oversaw big-time selling in two stocks that are widely held by other billionaires and everyday investors. The average stock in Viking Global's portfolio has been held for less than 19 months, which indicates Halvorsen isn't afraid to cash in his fund's chips when presented with the opportunity.
The worry is that there may be more nefarious reasons that Halvorsen showed Nvidia and Amazon to the door.
For instance, there's skepticism about the sustainability of the AI revolution. While most investors recognize the long-term potential of this technology, historical precedent shows that every game-changing technology has endured an early stage bubble over the last three decades. Investors consistently overestimate the adoption and/or optimization rates of innovations, leading to lofty expectations that go unmet. If an AI bubble were to form and burst, graphics processing unit titan Nvidia would be hit especially hard.
Another possible reason for this selling is Halvorsen's displeasure with the valuations of Nvidia and Amazon amid an already pricey stock market. Historically, a price-to-sales (P/S) ratio above 30 for a company at the forefront of a next-big-thing trend is indicative of a bubble. Nvidia's P/S ratio briefly surpassed 30 in early November.
As for Amazon, it's inexpensive relative to its forward cash flow potential, but quite pricey based on the traditional price-to-earnings (P/E) ratio. Halvorsen and his top advisors may have had little interest in paying a P/E ratio of 34 for Amazon.
Ole Andreas Halvorsen has a new favorite trillion-dollar stock
However, Viking Global's chief investor has also done his fair share of buying. The fund's most recent 13F shows that Halvorsen oversaw the opening of 15 new positions during the third quarter, none of which looms larger than trillion-dollar titan Microsoft (NASDAQ: MSFT).
During the September-ended quarter, Viking Global Investors acquired 2,429,412 shares of Microsoft, worth almost $1.26 billion. This purchase slots Microsoft in as the fund's fifth-largest holding and accounts for 3.2% of invested assets.
Make no mistake about it -- Microsoft's future is very much reliant on the success of artificial intelligence. Azure, the company's cloud infrastructure service platform, is incorporating generative AI and large language model solutions to attract new clients, retain existing subscribers, and increase its already robust subscription pricing power. Azure's constant-currency growth rate in Microsoft's fiscal first quarter (ended Sept. 30) was a scorching-hot 39%.
Given the potential for an AI bubble-bursting event, Microsoft's stock may be exposed to downside pressure. The caveat is that AI application companies are likely to endure less pain than AI hardware providers like Nvidia.
The silver lining for Microsoft is that it's far more than just an AI stock. While cloud services and AI tend to hog all the glory, legacy segments, Windows and Office, continue to generate high margins and an abundance of operating cash flow. Even though these segments are well past their glory days, they've retained significant market share and provide Microsoft with cash that can be used to invest in several high-growth initiatives, including AI, cloud computing, and quantum computing.
Speaking of cash, Microsoft has more than it knows what to do with. It closed out September with $102 billion in combined cash, cash equivalents, and short-term investments, and generated $45 billion in net cash from its operating activities in just the first three months of its fiscal year. This level of cash generation enables the company to conduct buybacks, pay a sizable dividend, and lean on acquisitions as a steady part of its corporate diet.
Lastly, Viking Global's billionaire boss may be enticed by Microsoft's comparatively attractive valuation. Its forward P/E of 25 marks a 16% discount to its average forward P/E over the trailing half-decade.
Should you buy stock in Microsoft right now?
Before you buy stock in Microsoft, consider this:
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Sean Williams has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Billionaire Ole Andreas Halvorsen Dumped His $39 Billion Fund's Stakes in Nvidia and Amazon for Another Trillion-Dollar Superstar

For Immediate Release
Chicago, IL – January 29, 2026 – Today, Zacks Investment Ideas feature highlights Applied Optoelectronics AAOI, Amazon AMZN, Oracle ORCL and Microsoft MSFT.
AAOI: A Critical Link in the AI Revolution
Applied Optoelectronics manufactures fiber-optic networking products for the cable TV, fiber-to-the-home, and data center markets. The Zacks Rank # (Buy) stock manufactures laser transceivers, which are a compact, high-performance module that acts as a bridge between electrical and optical communication.
This technology translates electrical data signals from network equipment (such as switches, routers, or GPUs). Laser transceivers are critical to the AI revolution because they overcome the speed and bandwidth limitations of traditional copper cables, making them valuable for enabling the massive, low-latency data flow required from training and operating large AI models. Additionally, with copper prices rising currently, these fiber optic cables are even more valuable.
New Bullish Catalyst: Hyperscale AI Contract Win
AAOI announced that it has landed its first volume order of 800G transceivers from a major hyperscale customer (rumored to be Amazon. This order will immediately be reflected in AAOI revenues. Additionally, when a company receives an order from a major tech juggernaut like Amazon, more orders often follow as new data centers are built.
Big Technical Breakout Signals Demand
Amid the contract win and multiple analyst updates, investors are rushing to get into AAOI shares. Shares are breaking out of a multi-week base structure and up more than 20% for the session as volume turnover has swelled to more than two times the norm, signaling massive institutional demand.
Meanwhile, roughly 18% of the float is short the stock. In other words, shorts are likely to be squeezed out of their shares in the coming days.
Explosive Revenue Growth
Wall Street analysts expect AAOI to grow revenues by a healthy 67% in 2026. However, this number is likely to be revised higher as the hyperscaler deal is taken into account.
Data Center Spending is Ramping
While 2025 was a strong year for data center spending, it is only expected to ramp further into the new year.
As competition between LLMs like ‘Gemini’ and ‘ChatGPT’ heats up, spending will increase. Meanwhile, 2026 is likely to be the year when robots and physical AI begin to appear in the mainstream (each of which requires data centers to train the AI).
Deep-Pocketed Customers
Beyond Amazon, AAOI has several deep-pocketed customers that are likely to spend more on AI including Oracle and Microsoft.
Bottom Line
As the battle for AI supremacy intensifies among global tech leaders, the demand for robust, high-performance networking hardware has never. Applied Optoelectronics finds itself at the center of this transition, benefitting from both a shift away from expensive copper and a surge in data center expansion.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.
See
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Zacks Investment Ideas feature highlights: Applied Optoelectronics,Amazon, Oracle and Microsoft

For Immediate Release
Chicago, IL – January 29, 2026– Zacks Director of Research Sheraz Mian says, "Total earnings for the 106 S&P 500 members that have reported Q4 results are up +14.9% from the same period last year on +7.9% higher revenues."
Taking Stock of Q4 Earnings Season
Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
The picture emerging from the Q4 earnings season is one of a steadily improving earnings outlook that is starting to show up in a favorable estimates revisions trend, particularly for some of the economically sensitive sectors like Basic Materials, Autos, Construction, and others. We should note here that the revisions trend has been consistently positive for the Tech sector for the last many quarters.
Total earnings for the 106 S&P 500 members that have reported Q4 results are up +14.9% from the same period last year on +7.9% higher revenues, with 76.4% beating EPS estimates and 63.2% beating revenue estimates.
The Q4 earnings and revenue growth pace at this stage represent a clear acceleration from what we had seen from this group of companies in other recent periods. Positive beats are less numerous this reporting cycle, with the EPS and revenue beats percentages tracking below the 20-quarter averages for this group of index members.
The Tech sector has been a key growth driver since 2023 and is on track to play that role in 2025 Q4 and beyond as well. Q4 earnings growth for the S&P 500 index drops to +5.5% from +9.2% after removing the Tech sector’s enormous contribution from the aggregate numbers. The Tech sector is currently expected to account for almost half of S&P 500 earnings growth in 2026.
Q4 earnings for the ‘Magnificent 7’ group of companies, which includes the likes of Meta Platforms META, Microsoft MSFT and Tesla TSLA, are expected to be up +17.1% from the same period last year on +16.7% higher revenues. Excluding the ‘Mag 7’ contribution, Q4 earnings for the rest of the index would be up only +6.3% (vs. +9.2%).
The Earnings Big Picture
The Tech sector has an outsized role in the S&P 500 index. The sector is expected to bring 36.1% of the index’s total earnings over the coming four-quarter period and currently accounts for 43.3% of the index’s total market capitalization. The Tech sector’s positive estimate revision trend is a major reason its members enjoy a strong market following and support.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.
See
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Zacks Earnings Trends Highlights: Meta, Microsoft and Tesla

Key Points
CHAT charges a much higher expense ratio but has delivered a stronger 1-year return
XLK is far larger and more diversified within the technology sector, while CHAT tilts toward generative AI and applies an ESG screen
CHAT has exhibited higher volatility and a deeper recent drawdown, reflecting its concentrated and thematic approach
The State Street Technology Select Sector SPDR ETF (NYSEMKT:XLK) stands out for its scale and broad technology exposure, while the Roundhill Investments - Generative AI & Technology ETF (NYSEMKT:CHAT) takes a narrower, actively managed approach with higher costs and a thematic AI focus.
Both the State Street Technology Select Sector SPDR ETF (NYSEMKT:XLK) and the Roundhill Investments - Generative AI & Technology ETF (NYSEMKT:CHAT) target the technology space, but their strategies and risk profiles differ. XLK offers diversified exposure to the largest U.S. tech names, while CHAT zooms in on generative artificial intelligence and related themes, actively picking stocks it believes will benefit most from this trend. This comparison unpacks their differences in cost, performance, holdings, and risk to help investors see which may better fit their goals.
Snapshot (cost & size)
Issuer
SPDR
Roundhill Investments
Expense ratio
0.08%
0.75%
1-yr return (as of 2026-01-27)
30.91%
63.06%
AUM
$92.48 billion
$995.24 million
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.
CHAT’s expense ratio is meaningfully higher than XLK’s, making XLK the more affordable option for cost-conscious investors.
Performance & risk comparison
Max drawdown (2 y)
-25.65%
-31.35%
CHAT’s recent returns have outpaced XLK, but this comes with higher risk. Its larger drawdown and elevated beta signal greater volatility, which could be a trade-off for investors drawn to its AI focus.
What's inside
CHAT is an actively managed fund with 52 holdings and a mandate to capture the growth of generative artificial intelligence. The portfolio leans heavily into technology (85%), with smaller allocations to communication services and consumer cyclicals. Its top holdings include Alphabet Inc (NASDAQ:GOOGL), NVIDIA Corp (NASDAQ:NVDA), and Microsoft Corp (NASDAQ:MSFT), and the fund applies an ESG screen. At 2.7 years old, it is relatively new and intentionally concentrated around the AI theme.
XLK, by contrast, offers broad technology sector exposure with 70 holdings, covering nearly the entire U.S. tech landscape. Its top positions are Nvidia Corp (NASDAQ:NVDA), Apple Inc (NASDAQ:AAPL), and Microsoft Corp (NASDAQ:MSFT), reflecting the sector’s giants. XLK does not apply an ESG screen or thematic tilt, providing a more traditional approach to tech investing.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Many investors reach for AI funds expecting broad tech exposure, without realizing how much concentration they are taking on. That distinction sits at the heart of the decision between the Technology Select Sector SPDR Fund and the Roundhill Generative AI and Technology ETF, two funds that live in the same sector but reflect very different views on how to capture growth.
XLK is built as a core holding and offers broad access to the largest U.S. technology companies through a low-cost and rules-based structure. It spreads risk across established leaders whose earnings power drives long-term returns. CHAT takes a much narrower approach. It actively selects companies tied to generative AI and concentrates capital around a single theme. The trade-off is straightforward: XLK prioritizes scale and liquidity, while CHAT prioritizes thematic focus and the potential of outsized gains when AI enthusiasm runs hot.
For investors, XLK suits you if you are looking for steady exposure to tech without tying outcomes to a single narrative, while CHAT fits investors who are intentionally seeking AI exposure and willing to accept sharper swings and higher costs. The choice ultimately comes down to whether you want tech exposure anchored in broad earnings power or tied to continued confidence in a single trend.
Where to invest $1,000 right now
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*Stock Advisor returns as of January 29, 2026.
Eric Trie has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

XLK vs. CHAT: Broad Tech Exposure or a Focused AI Bet?

Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
The picture emerging from the Q4 earnings season is one of a steadily improving earnings outlook that is starting to show up in a favorable estimates revisions trend, particularly for some of the economically sensitive sectors like Basic Materials, Autos, Construction, and others. We should note here that the revisions trend has been consistently positive for the Tech sector for the last many quarters.
Total earnings for the 106 S&P 500 members that have reported Q4 results are up +14.9% from the same period last year on +7.9% higher revenues, with 76.4% beating EPS estimates and 63.2% beating revenue estimates.
The Q4 earnings and revenue growth pace at this stage represent a clear acceleration from what we had seen from this group of companies in other recent periods. Positive beats are less numerous this reporting cycle, with the EPS and revenue beats percentages tracking below the 20-quarter averages for this group of index members.
The Tech sector has been a key growth driver since 2023 and is on track to play that role in 2025 Q4 and beyond as well. Q4 earnings growth for the S&P 500 index drops to +5.5% from +9.2% after removing the Tech sector’s enormous contribution from the aggregate numbers. The Tech sector is currently expected to account for almost half of S&P 500 earnings growth in 2026.
Q4 earnings for the ‘Magnificent 7’ group of companies, which includes the likes of Meta Platforms META, Microsoft MSFT, and Tesla TSLA, are expected to be up +17.1% from the same period last year on +16.7% higher revenues. Excluding the ‘Mag 7’ contribution, Q4 earnings for the rest of the index would be up only +6.3% (vs. +9.2%).
The Earnings Big Picture
The chart below shows expectations for 2025 Q4 in terms of what was achieved in the preceding four periods and what is currently expected for the next three quarters.
Image Source: Zacks Investment Research
The chart below shows the overall earnings picture for the S&P 500 index on an annual basis.
Image Source: Zacks Investment Research
The Tech sector has an outsized role in the S&P 500 index. The sector is expected to bring 36.1% of the index’s total earnings over the coming four-quarter period and currently accounts for 43.3% of the index’s total market capitalization. The Tech sector’s positive estimate revision trend is a major reason its members enjoy a strong market following and support.
Quantum Computing Stocks Set To Soar
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Taking Stock of the Q4 Earnings Season

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Microsoft (MSFT) Q2 2026 Earnings Call Transcript

Key Points
Nvidia is selling the best picks and shovels for the booming AI market.
It locks in those customers with its software, networking products, and other services.
Its stock still looks reasonably valued relative to its growth potential.
Nvidia's (NASDAQ: NVDA) stock surged 26,960% over the past decade. Much of that growth was driven by the soaring popularity of artificial intelligence (AI) applications. Nvidia's discrete GPUs, which were once mainly used to render graphics in video games, were well-suited to handle complex AI applications because they could simultaneously process parallel tasks. That set them apart from CPUs, which were optimized for processing sequential tasks.
Some investors might be reluctant to chase Nvidia's stock after those massive gains. However, a single catalyst could drive its stock even higher in 2026: skyrocketing demand for AI infrastructure upgrades to support the latest AI applications.
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Why would that trend drive Nvidia's stock higher?
The global AI infrastructure market could expand at a CAGR of 29.1% from 2025 to 2032, according to Fortune Business Insights, as more data centers upgrade their AI chips. Nvidia already controls more than 90% of the discrete GPU market, according to Carbon Credits. It maintained its lead in the booming data center market through AI-oriented architecture upgrades, including Turing (2019), Ampere (2020), Hopper (2022), and Blackwell (2024).
Nvidia also locks in its customers with CUDA (Compute Unified Device Architecture), its proprietary programming platform optimized for its own chips. It also bundles its chips with its own networking products, software, and services to further widen its moat. Most of the world's top AI companies -- including Microsoft (NASDAQ: MSFT), OpenAI, and Meta Platforms (NASDAQ: META) -- have spent billions of dollars on Nvidia's data center chips.
Nvidia faces some competition from AMD's (NASDAQ: AMD) cheaper data center GPUs and Broadcom's (NASDAQ: AVGO) custom AI accelerators for hyperscalers. Still, there could be plenty of room for all of these leading AI chipmakers to grow without stepping on each other's toes. Moreover, Nvidia's "best in breed" reputation, the speed of its deployments, and the stickiness of its prisoner-taking ecosystem should make it the preferred chipmaker for most AI companies. Simply put, Nvidia should continue to sell the best picks and shovels for general-purpose AI applications and remain a linchpin of the AI infrastructure market.
From fiscal 2025 (which ended last January) to fiscal 2028, analysts expect Nvidia's revenue and earnings per share (EPS) to grow at CAGRs of 47% and 45%, respectively. Those are exceptional growth rates for a stock that trades at 27 times next year's earnings, and it should remain one of the simplest ways to profit from the AI market's long-term growth.
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Leo Sun has positions in Meta Platforms. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

1 Reason Nvidia Stock Could Surge in 2026

AI-focused cloud stocks Arista Networks ANET and CoreWeave CRWV have been on a tremendous rally again as investors rotate back into AI infrastructure plays with major chipmakers — especially Nvidia NVDA) — signaling stronger long-term demand for data center capacity.
After being hit hard during the late-year AI bubble scare at the end of 2025, CoreWeave shares have spiked +40% in the last month, seeing a sharp reversal and an extended rebound following the announcement of a new partnership with Nvidia.
Meanwhile, the +10% monthly move in Arista’s stock has also placed it among the better performers in 2026 so far.
It’s worth noting that some of Arista’s biggest AI-cloud partnerships include deep technical collaborations with privately held AI-infrastructure and data-platform company VAST Data and Nvidia as well, on top of having other broad integrations across hyperscale cloud and AI-cluster environments.
Image Source: Zacks Investment Research
Broader Market Rotation Back Into AI Infrastructure
As investors digest economic data and look past short-term volatility, money is flowing back into companies tied to the physical backbone of AI: GPUs, cloud capacity, and networking.
Being a prime example, CoreWeave’s trading volume has surged 55% above its three-month average, seeing heavy market activity throughout January and signaling renewed institutional interest.
Image Source: TradingView
CoreWeave’s Boost from Nvidia
Nvidia’s total investment in CoreWeave now stands at roughly $2.1 billion, combining its original $100 million stake with a new $2 billion equity infusion to help build large-scale AI “factories” with 5+ gigawatts of capacity by 2030.
This move places Nvidia as CoreWeave’s second-largest shareholder and signaled the chip giant’s commitment to scaling AI compute capacity through specialized cloud partners. CoreWeave serves as one of Nvidia’s most important AI-cloud partners, providing massive GPU-accelerated compute capacity by deploying Nvidia’s newest architectures and helping Nvidia scale its “AI factory” strategy in the process.
Like Arista Networks, CoreWeave helps enterprises run demanding AI workloads efficiently and at scale, and it does so by building its cloud entirely on Nvidia’s full stack. The partnership is deep and highly strategic, with CoreWeave acting as both a customer and an operational extension of Nvidia’s AI-infrastructure ambitions.
Investors now see CoreWeave’s AI-specific cloud servers and triple-digit revenue growth as signs of durable demand. Going public in March of last year, CoreWeave has released three quarterly reports so far, with Q3 EPS coming in at an adjusted loss of $0.08 a share on sales of $1.36 billion.
CoreWeave will be reporting Q4 results on Monday, February 9, with FY25 EPS now expected at an adjusted loss of $1.31, although annual sales are projected to increase 168% to $5.1 billion compared to the $1.9 billion the company reported in 2024.
Arista is Still Riding the AI Networking Wave
Arista’s 400G/800G high-speed switches have become go-to hardware for hyperscalers and AI-data-center builders. This AI-networking leadership is also a major reason ANET is starting to spike again, as Arista has been a core beneficiary of the AI infrastructure boom.
To that point, Arista’s AI cloud partnerships with Nvidia and VAST Data are focused on high-bandwidth, low-latency networking essential for training and running large AI models. Furthermore, AI-driven data-center networking remains extremely strong, with Arista posting robust revenue growth tied to hyperscale and AI infrastructure buildouts.
Known to serve major hyperscalers such as Microsoft MSFT and Meta Platforms META, Arista most recently reported a 27% and 25% increase in Q3 revenue ($2.3 billion) and EPS ($0.75), respectively.
Arista is scheduled to report Q4 results on Thursday, February 12, with FY25 sales and EPS now expected to be up nearly 27%, respectively, at $8.87 billion and $2.88 per share.
Conclusion & Final Thoughts
CoreWeave continues to get passes thrown from Nvidia, which is very intriguing in regard to credibility and the likelihood that it will be able to finish these plays in terms of eventual profitability.
The resurging hype in Arista Networks stock, on the other hand, is more grounded in diversification outside of Nvidia and financial fundamentals, including strong EPS growth and a somewhat lofty but trackable forward earnings multiple of 44X.
For now, Arista Networks stock sports a Zacks Rank #2 (Buy) with CoreWeave shares landing a Zacks Rank #3 (Hold).
Quantum Computing Stocks Set To Soar
Artificial intelligence has already reshaped the investment landscape, and its convergence with quantum computing could lead to the most significant wealth-building opportunities of our time.
Today, you have a chance to position your portfolio at the forefront of this technological revolution. In our urgent special report, Beyond AI: The Quantum Leap in Computing Power, you'll discover the little-known stocks we believe will win the quantum computing race and deliver massive gains to early investors.
Access the Report Free Now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Microsoft Corporation

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