Stocks shot out of the gate Thursday thanks to a pair of strong Big Tech earnings reports. The main indexes were lower by the close, though, as caution set in ahead of tomorrow's jobs report and President Donald Trump's tariff deadline.
Facebook parent Meta Platforms (META) and tech giant Microsoft (MSFT) led the charge higher early on, thanks to the mega caps' strong quarterly results.
For its second quarter, Meta reported earnings of $7.14 per share, up 38% year over year, on revenue of $47.5 billion (+22% YoY).
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The Facebook parent also lifted the low end of its full-year capital expenditures forecast, now expecting spending in the range of $66 billion to $72 billion, up nearly 76% year over year at the midpoint.
Meta is "firing on all cylinders," says CFRA Research analyst Angelo Zino. "We are confident in META's AI-driven growth opportunities as the company pursues aggressive but warranted spending given long-term prospects."
Thanks to Thursday's 11.3% surge, Meta's share price is now at an even loftier $773 – leaving many to wonder if it will be one of the next stocks to split.
Microsoft nears a $4 trillion market cap
Microsoft, meanwhile, forecast higher-than-expected capital expenditures of more than $30 billion for its fiscal first quarter. The company also said fiscal fourth-quarter revenue was up 18% year over year, while earnings per share grew 24%.
This was due in part to a 34% jump in revenue for Microsoft's Azure AI cloud-computing platform and a 26% rise in total revenue for its Intelligence Cloud segment.
"This was a watershed quarter for Redmond and we are raising our price target to $625 from $600, reflecting the eye-popping cloud and AI strength," says Wedbush analyst Dan Ives. This represents implied upside of more than 17% to today's close.
"It remains clear," Ives says, that fiscal 2026 "remains the true inflection year of AI growth for Microsoft as CIO lines build for deployments behind the velvet ropes in Redmond with the company investing aggressively to capture this opportunity over the coming years."
MSFT stock sailed 4% higher and came close to joining Nvidia (NVDA) in the $4 trillion market-cap club.
Thanks to the strength of these mega-cap stocks, the Nasdaq Composite only lost 0.03% to 21,122. The S&P 500 fell 0.4% at 6,339, while the Dow Jones Industrial Average closed down 0.7% at 44,130.
Arm sinks 13% after earnings
While UnitedHealth Group (UNH, -6.2%) and Merck (MRK, -4.4%) were the worst Dow Jones stocks today, Invisalign maker Align Technology (ALGN, -36.6%) kept pressure on the S&P 500 after its second-quarter revenue miss.
Arm Holdings (ARM) was also at the bottom of the S&P 500, plunging 13.4% after its second-quarter results. The chip developer reported in-line earnings, but it fell just shy of top-line expectations as soft demand for smartphones weighed on royalty revenue.
The company also said it expects second-quarter earnings of 33 cents per share at the midpoint, lower than the 35 cents per share analysts are calling for.
"While we view Arm's results as largely consistent with the prior quarter, investors will be disappointed by the lack of upside," says William Blair analyst Sebastien Naji.
He adds that Arm's post-earnings pullback should be seen as "a buying opportunity for a core semi asset that is at the heart of a large swath of modern compute."
Naji has an Outperform (Buy) rating on Arm, and he's not alone. Of the 39 analysts covering the tech stock who are tracked by S&P Global Market Intelligence, 16 say it's a Strong Buy, six have it at Buy, 13 call it a Hold and four have it at Sell or Strong Sell. This works out to a consensus Buy recommendation.
The busy week's not over yet
Between the earnings calendar, the economic calendar, and a blowout IPO for software company Figma (FIG), market participants have had plenty to sift through this week – and there's still more on the docket.
In addition to quarterly results from Apple (AAPL) and Amazon.com (AMZN) – due out after tonight's close – tomorrow morning will bring the release of the July jobs report.
Investors are also keeping a close eye on tariff news. For one, August 1 marks the Trump administration's deadline to secure trade deals with most countries, though the White House said earlier that the president will sign an executive order this afternoon or evening that will set tariff rates.
China has a separate deadline of August 12, while earlier today, Trump announced a 90-day extension for Mexico.
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