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This week's earnings reports from tech giants Alphabet (GOOG, GOOGL) and Amazon (AMZN) will be key in understanding the health of the "Magnificent Seven" stocks.
Mark Mahaney, managing director and head of internet research at Evercore ISI, joins Morning Brief to examine the Magnificent Seven trade, highlighting artificial intelligence (AI) investment strategies, the impact of tariffs, and overall demand trends.
Mahaney expects that, like Meta (META), both Amazon and Google will likely continue aggressively investing in AI despite the emergence of DeepSeek's cost-effective AI model. He also notes these companies face some exposure to tariff impacts, especially in cross-border marketing.
In particular, Mahaney questions the growth of Amazon's cloud-computing service, Amazon Web Services (AWS).
"The question is whether AWS is going to show similar trends as Microsoft did," he explains. "We think they will. They did 19% growth for AWS last quarter; if it's 20% this quarter — great, if it's 18% — bad ... [but] 19%, which is what we think it's going to be ... [is] kind of neutral."
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Mahaney adds, "If somebody figures out a way to run these large language models [LLMs] at materially lower compute power, then I think it's a win for these companies."
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This post was written by Josh Lynch