The Roundhill Magnificent Seven ETF (MAGS) finished the week at $70.07, nearly 7% below the year-to-date peak. Leading Magnificent Seven stocks have retreated over the past two weeks as the rally weakened and earnings season began. The ETF declined last week as Meta Platforms and Tesla published earnings.
Meta shares continued falling and now stand 18% below the year-to-date peak after results showed negative free cash flow last quarter. Tesla shares also declined as quarterly revenue fell in the electric vehicle and energy businesses. Growth in Tesla's Services and other segment partly counterbalanced those declines.
Microsoft shares finished last week at $524, below this month's peak of $550. Microsoft shares remain 50% above the year-to-date low. Benzinga data show analysts expect Microsoft's upcoming results to record revenue growth of 17% to $90 billion. Benzinga data show analysts expect earnings per share of $4.72, compared with $4.13 a year earlier. Microsoft's headline earnings will have little effect on the share price. Investors will instead examine capital expenditures and returns on AI investment, particularly Copilot. Microsoft's previous earnings release disclosed planned spending of between $175 billion and $190 billion this year.
Alphabet shares have fallen to $317, a decline of 22% from the year-to-date peak of $402. Alphabet will release earnings this week. Analysts expect Alphabet revenue to increase 25% to $127 billion. Analysts expect Alphabet earnings per share to reach $2.97. Alphabet shares will respond to results from advertising, the business that supplies most of Alphabet's revenue. Alphabet shares will also respond to free cash flow as AI spending continues. Alphabet recorded negative free cash flow of $5.85 billion in the second quarter. Alphabet management has indicated spending of between $195 billion and $205 billion this year. Alphabet's results will offer further indications about Tensor Processing Unit (TPU) revenue. BNP Paribas predicts TPU revenue will reach $40 billion next year.
Amazon shares have entered a correction, falling from $287 in August to $248 today. Amazon's results are expected to show revenue growth of 12.2% to $202 billion, led by AWS. Amazon shares will respond to free cash flow, which became negative in the second quarter. Negative free cash flow may persist as Amazon increases AI spending. Amazon predicted AI spending of $220 billion, above the previously reported $200 billion.
Magnificent Seven ETF Pulls Back Ahead of Microsoft, Google, and Amazon Earnings
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Summary
ETF outflows accelerated this week as the Roundhill Magnificent Seven ETF (MAGS) closed at $70.07, nearly 7% below its year-to-date high. Leading names like Meta and Tesla fell after earnings, with Meta down 18% from its peak. Microsoft shares dipped to $524, below this month’s $550 high, but remain 50% above the year-to-date low. Analysts expect 17% revenue growth to $90 billion and EPS of $4.72. ETF outflows reflect investor caution ahead of key earnings reports from tech giants.
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