Midday Update: Mag 7, Software Names Mixed Ahead of Earnings

In the middle of earnings from Magnificent 7 and software services players this week, stock performance may be starting to reflect the realities of AI spending.

Amazon (AMZN) was moving lower while Alphabet (GOOGL) shares were up more than 9% in midday trading Thursday. Meta (META) was off nearly 9% and Microsoft (MSFT) stock was down more than 5%.

Microsoft may be struggling the most with resources and getting enough chips to run cloud services, and Alphabet has been in the lead, according to Tiernan Ray, CEO and publisher of the Technology Letter, who made the observation Tuesday ahead of the tech earnings onslaught.

Ray pointed to earnings after the bell tonight from software services companies, namely Reddit (RDDT), Roblox (RBLX), Atlassian (TEAM) and Twilio (TWLO). He said if any “can demonstrate qualitatively or quantitatively “that they're getting some kind of incremental revenue from AI, that will calm [software investor] fears that these companies are irrelevant in an AI age. … Atlassian and other stocks in software were trading at enormous valuations, [and] everyone had projections for years out into the future about what these companies would earn. Those projections have gone away, and nobody quite knows what they should do to justify a stock price.”

Reddit, Roblox and Atlassian were moving lower in midday trading, while Twilio was up nearly 3%.

For more, see Tiernan Ray Talks Big Tech Headwinds & Tailwinds in Mag 7 Earnings Week | Schwab Network

Also see more on tech in The Morning Trade: SNDK & WDC | Morning Trade Live| Schwab Network

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