ETFs under pressure ahead of Microsoft, Meta earnings
ETFs such as OGIG and AIHY face pressure as Microsoft and Meta report earnings July 29. Investors seek proof that hyperscalers’ rising AI capex will yield near-term returns.
Exchange-traded funds focused on large internet companies faced pressure as Microsoft and Meta prepared to report second-quarter results after the market close on July 29. Investors sought evidence that rising AI infrastructure capital expenditures at hyperscale cloud providers will produce returns in the near term.
Hyperscale cloud providers have shifted spending from experimental software projects to building more physical compute capacity to train and run advanced AI models. That increase in capital spending has reduced free cash flow at the largest technology firms.
Alphabet reported second-quarter EPS of $9.11 and revenue of $119.8 billion, and raised full-year capital expenditure guidance to $195 billion–$205 billion from $180 billion–$190 billion. Alphabet’s stock fell 4.24% in after-hours trading following the guidance update.
ETFs and large-cap indexes hold concentrated positions in the biggest hyperscalers. The ALPS O’Shares Global Internet Giants ETF (OGIG) lists Microsoft and Meta among its top holdings. The Defiance AI Hyperscale Leader ETF (AIHY) allocates nearly 80% of its weight to Microsoft, Meta, Alphabet and Amazon. The SPDR Portfolio S&P 500 ETF assigns more than 15% to those four companies, and the Invesco QQQ Trust assigns over 18%.
Wall Street expects Microsoft to report second-quarter EPS of $4.25 and revenue of $87.7 billion, implying about 16% EPS growth and roughly 15% revenue growth year over year. Analysts have raised full-year capex estimates toward $220 billion from earlier forecasts near $190 billion. Investors will watch Azure cloud growth and enterprise adoption of Copilot products for revenue signals.
Meta is forecast to report EPS of $7.14 and revenue of $60.23 billion, reflecting flat EPS year over year and about 27% revenue growth. Meta provided full-year capex guidance of $125 billion–$145 billion in the first quarter; any change to that range will be monitored.
Amazon is expected to report the day after Microsoft and Meta, with consensus EPS of $1.82 and revenue near $195.9 billion. Amazon has indicated plans to spend roughly $200 billion on capital projects in 2026.
Because the largest hyperscalers represent large allocations in major ETFs and indexes, their earnings and any guidance changes will influence fund flows and performance. Market participants will monitor cloud revenue trends, enterprise AI product adoption and revisions to capex plans for signs that infrastructure spending is translating into revenue.
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