Business Insights and Market Implications Summary

Earnings Performance

• Mag 7 Q1 Results: Mixed performance with significant variance:
  • Tesla (-56.8%)
  • Apple (+4.8%)
  • Amazon (+42.6%)
  • Alphabet (+46%)

Capital Expenditure & AI Investments

• Companies maintain capex plans, focusing on AI infrastructure for long-term competitiveness.
• Google aims to defend search dominance in the AI landscape amid competition from DeepSeek.

Cloud Revenue Trends

• Amazon AWS: Q1 revenue growth decelerated to +16.9% ($29.3B) due to capacity constraints.
• Microsoft Azure: Outperformed with stronger cloud growth.
• Amazon's Q2 earnings guidance slightly lowered due to expense timing, but revenue aligned with expectations.

Tariff Impact

• Apple faced a 100 basis point impact on June quarter gross margins due to tariffs, primarily affecting China sales.
• Shifts in iPhone assembly to India underway.

Market Performance vs. S&P 500

• Mag 7 Performance: Microsoft outperformed; Meta, Amazon, and Apple underperformed relative to the Zacks Tech sector and S&P 500.

Earnings Estimates

• Mag 7 earnings estimates under pressure but Q1 results reversed trend temporarily.
• 2025 earnings growth expected at +11%, up from +9.9% last week, down from +15.7% three months ago.

S&P 500 Contribution

• Mag 7 expected to contribute 23.9% of S&P 500 earnings in 2025 (up from 23.2% in 2024 and 18.3% in 2023).
• Comprise 30.6% of the S&P 500's market cap.

Upcoming Earnings

• Over 1,300 companies, including 94 S&P 500 members, reporting this week.
• Over 90% of the index has now been reported.

Q1 Earnings Scorecard

• 71.6% of S&P 500 reported:
  • Earnings up +13.4% on +4.3% revenue growth.
  • 72.6% beat EPS estimates, 60.6% beat revenue estimates (below historical averages).

Q1 Expectations

• Overall Q1 earnings expected to be up +11.6% on +4.5% revenue growth, following +14.1% earnings growth on +5.7% revenue gains in the preceding period.

Diminished Earnings Expectations

• Q2 2025 estimates decreasing with further negative revisions expected due to uncertainty and potential tariffs.
• Full-year 2025 estimates under pressure, especially since mid-February, with cuts in 14 of 16 Zacks sectors.

---

Meta Controversies

• Meta Denies Censorship Deal: Refuted claims of assisting China in suppressing Taiwanese Facebook users. Claims no operation in China and has not censored Taiwanese content.
• FCCPC Response to Meta's Threat: Nigerian regulator remains committed to consumer protection and data privacy despite Meta's threat to exit over $290M fine.

---

Enterprise Products Partners

• North American midstream MLP with a 6.8% yield, transitioning from rapid growth to slow growth, focusing on incremental projects and consolidation.
• Distribution increased for 26 consecutive years.

---

Aldi Cheese Recall

• Great Lakes Cheese Company recalls 340g shredded cheese in Connecticut, Michigan, Ohio, and Pennsylvania due to potential "foreign object" contamination (Class II recall).
• Affected products have UPC 4061463330840 and Best By dates of July 13 & 14, 2025.

---

Social Media Security Tips

• Protect accounts with strong passwords, two-factor authentication (preferably via authenticator app), avoid public Wi-Fi without VPN, audit app permissions, beware of phishing attempts, update recovery options, and maintain skepticism online.