Thursday features "Powell's Final Dance" with the Big Four rarely reporting earnings on the same day

Author: Long Yue, Wall Street Journal

Within one day, Wall Street must digest four tech giants’ earnings reports and multiple interest rate decisions — this day is called by the market “one of the most important earnings days in recent years.”

On April 29th Eastern Time (early morning of April 30th Beijing time), Alphabet (Google), Amazon, Meta, and Microsoft will release their quarterly results after market close on the same trading day. Meanwhile, the Federal Reserve FOMC will conclude its two-day meeting and announce its interest rate decision, with Fed Chair Powell hosting his last press conference during his term. The Bank of England and the European Central Bank will also announce their latest rate decisions on the same day.

Matt Stucky, Chief Investment Officer at Northwestern Mutual, characterized this day as “one of the most important earnings days in recent years.” The combined market capitalization of these four companies is about $11.6 trillion, accounting for over 19% of the S&P 500 index. Any performance fluctuation from any of them could influence the broader market.

Since recent lows, the S&P 500 and Nasdaq indices have rebounded approximately 11% and 18%, respectively, with funds flowing back into technology and data center-related sectors. The core narrative of this rebound is the continued expansion of AI investments. This earnings season will be a key test of whether this narrative can continue.

$650 billion AI bill, market awaits returns

This year, the four companies’ total capital expenditure budget reaches up to $650 billion: Google guides $175-185 billion, Meta $115-135 billion, Amazon about $200 billion, and Microsoft’s capital expenditure for the last quarter alone has reached $37.5 billion.

Money is still flowing in, but market patience is narrowing.

Bernstein analyst Mark Shmulik wrote in a research report last week that these four large cloud providers need to do three things simultaneously: deliver AI-driven revenue that exceeds expectations, maintain their capital expenditure budgets without shrinking, and demonstrate cost control through layoffs or pricing power. “Overall, the pattern entering earnings season is quite clear and consistent.”

Citizens analyst Andrew Boone told MarketWatch, “The entire AI ecosystem is currently supply-constrained”—infrastructure and energy are insufficient to meet computing demand. Therefore, all four companies need to prove they can quickly bring data center capacity online and clear backlogs. “Part of the issue is who can execute well enough to truly put capital expenditure into action.”

Demand signals remain strong. Boone pointed out that since 2026, demand for computing power has surged: Anthropic has signed new agreements to expand access to AI infrastructure; Amazon announced it will supply Meta with tens of millions of custom Graviton chips; Google disclosed at the Google Cloud Next conference last week that the number of tokens processed daily by its models has increased from 10 billion last quarter to 16 billion.

Different pressures for each company, with Microsoft in the most delicate position

Google faces mainly cost pressures. The company has previously indicated that depreciation will accelerate in Q1 and significantly increase for the full year. The market’s concern is not whether Google will continue to invest, but whether cloud and AI-related revenues can more quickly offset these expenses.

Meta faces the most direct challenge. It has the strongest advertising cash flow and the most aggressive infrastructure investments. The company has explicitly stated that its capital expenditure will rise to $115-135 billion by 2026, but its full-year operating profit will still be higher than in 2025. After the earnings are released, the market will quickly judge whether the profitability of its advertising business can continue to cover the expansion of AI investments.

Amazon’s issue is not just heavy investment, but also the delayed realization of returns. CEO Andy Jassy explicitly stated in the shareholder letter that most of its cloud business capital expenditure in 2026 will be gradually realized in 2027-2028. AWS added 3.9 gigawatts of power capacity in 2025, with total capacity expected to double by the end of 2027, but the company also admits there are capacity constraints and unmet demand. The market will pay particular attention to how management discusses customer commitments, capacity ramp-up, and the pace of realization.

Microsoft’s situation is the most delicate. Matt Stucky believes Microsoft faces the highest risk among the four. Last quarter, Azure’s growth disappointed the market, and the adoption rate of Copilot for enterprises was below expectations. Its stock has fallen 12% since the beginning of the year, the worst among the four. Guggenheim analyst John DiFucci estimates that Wall Street expects Azure’s growth this quarter to be around 38%, but in a report last week, he wrote: “This expectation implies that new business growth needs to jump significantly, which seems unlikely.”

Stucky said that the adoption trend of Microsoft Copilot will influence the overall software sector’s market sentiment this quarter.

Funds flow back into technology, data centers, and related infrastructure

Powell’s “last dance,” rate expectations already priced in

On the same day, the Fed’s FOMC will conclude its two-day meeting and announce its interest rate decision. The market has fully priced in a hold at the 3.50%-3.75% range.

After rate cuts in the second half of 2025, the Fed paused, and rising oil prices have made inflation outlook more complex, pushing back the window for further rate cuts.

This will also be Powell’s final press conference as Fed Chair. His term ends on May 15, and Trump-nominated successor Waller is expected to be confirmed by the Senate before the Fed’s next meeting in mid-June. The biggest suspense is whether Powell will announce that he will remain on the Federal Reserve Board after stepping down as Chair.

Geopolitical risks: Hormuz Strait impacts AI supply chain

Geopolitical tensions add an extra variable to this day. The blockade of the Strait of Hormuz directly impacts global energy flows and supply chains, and data center supply chains are also affected.

Moody’s analyst Terrence Dennehy highlighted last week in a report that Middle East conflicts pose a “supply risk” to the helium market. “Helium is critical in multiple stages of semiconductor manufacturing—including cooling, carrier gas use, and leak detection—and there are no effective substitutes,” Dennehy wrote.

Stucky from Northwestern Mutual also indicated that there is a possibility of further upward revisions to capital expenditure forecasts by the four companies, which could trigger a new round of market concerns about over-investment in AI.

How the market will price after earnings

This earnings season is more like a filtering point rather than a total switch.

The main theme of AI shows no signs of ending; funds are still flowing in. But the market’s pricing logic is diverging: companies that realize profits faster, have more solid orders, and more stable margins will continue to be valued at a premium; those with large investments but unclear return paths will see more volatile stock prices.

The semiconductor, server, network equipment, and data center equipment supply chain remains the most directly influenced by major company investments. Recently, software and chip stocks have begun to diverge, indicating that the market is starting to focus more on order and infrastructure proximity. If the four companies’ earnings continue to confirm strong demand and capital expenditure intensity, this divergence will only become more pronounced.

On earnings day, the market’s most concerned questions are: whether capital expenditure guidance will be raised again for the full year, whether cloud growth can continue to accelerate, whether there will be clearer disclosures of AI-related revenues, and whether profit margins and cash flows face more obvious pressures.