Qixiong ETF (MAGS.US) pulls back 7%: Microsoft (MSFT.US) Google (GOOGL.US) Amazon (AMZN.US) earnings preview

According to Woofun AI, the seven strongest tech stocks in the market have collectively experienced a pullback in the past two weeks as the momentum of the recent rebound wanes and earnings season approaches. Roundhill Magnificent Seven ETF (MAGS.US) closed at $70.07 this week, down nearly 7% from its year-long high.

This correction trend accelerated after Meta (META.US) and Tesla (TSLA.US) released financial reports. Among them, Meta (META.US)'s stock price fell 18% from its high during the year due to negative quarterly free cash flow; Tesla (TSLA.US) was pressured by declining revenue in the electric vehicle and energy business, although growth in its services and other businesses partially offset the decline.

According to data compiled by Woofun AI, Microsoft (MSFT.US) closed at $524 last week. Although slightly lower than this month's high of $550, it is still 50% higher than the low during the year. Analysts forecast Microsoft (MSFT.US) revenue will increase 17% year over year to $90 billion, and earnings per share will rise from $4.13 to $4.72 billion.

However, stock price fluctuations are more dependent on investors' scrutiny of AI capital expenditure and return, particularly the performance of Copilot products. Microsoft (MSFT.US) previously disclosed that the 2026 AI-related spending plan is between $175 billion and $190 billion.

Meanwhile, Alphabet's (GOOGL.US) stock price has dropped to $317, a sharp drop of 22% from its high of $402 during the year. The market expects its revenue to grow 25% to $127 billion and earnings per share of $2.97. The performance of the advertising business, which is the main source of revenue, and free cash flow due to continued AI investment will be key variables in stock prices. Alphabet (GOOGL.US)'s second-quarter free cash flow was negative $5.85 billion, and management indicated that 2026 AI spending would be between $19.5 billion and $205 billion.

Additionally, BNP Paribas predicts that its TPU (tensor processor) business revenue will reach $40 billion in 2027, and the growth potential of this segment will be further clarified in this week's earnings report.

Amazon (AMZN.US) shares also experienced a significant correction, falling from $287 in August to $248 now. Analysts expect its revenue to grow by 12.2% to $2020 billion, with the AWS business being the core driver.

However, the worsening trend in free cash flow has raised market concerns. Amazon (AMZN.US) free cash flow in the second quarter turned negative, and this negative trend is likely to continue as AI investment increases. Amazon (AMZN.US) expects AI spending to reach $220 billion in 2026, up from the $200 billion previously reported.

From a structural perspective, these three tech giants' huge capital spending on AI infrastructure is reshaping their financial models, and temporary pressure on free cash flow has become a common characteristic. Microsoft (MSFT.US), Alphabet (GOOGL.US), and Amazon (AMZN.US) AI spending expectations fall in the range of 175 billion to 190 billion US dollars, 19.5 billion to 205 billion US dollars, and 220 billion US dollars, respectively, showing that the industry attaches great importance to the computing power competition.

This strategy of shifting from pursuing short-term profits to long-term infrastructure investment suppresses stock price performance in the short term, but it also lays the foundation for future technical barriers. It is worth noting that investors' focus on financial reports has shifted from simple revenue growth to an in-depth evaluation of capital efficiency and AI commercialization. This is another stress test of high capital expenditure models by the market following the previous round of tech stock valuation restructuring. The next trend will depend on whether these giants can prove that their AI investments can be converted into sustainable profit growth.