Like we discussed last week, we’re about to get deep into the earnings season starting today. When I think about analyzing companies in general, I believe there are three main things that matter:

1) Earnings growth expectations

2) Valuation (over the longer term)

3) Sentiment (the general market attitude towards a company)

With 6 of the "Magnificent 7" set to report this week, we took a snapshot of how these look within this framework.

Earnings growth expectations:

Using the aggregate consensus expectations across Wall Street, here are the consensus estimates for earning per share (EPS) for Q4 2024 and 2025, as well as the earnings growth expected for each Mag 7 company reporting this week. 

There’s a few things to point out here:

• Consensus expects Tesla, Apple, and Microsoft to have better earnings growth for 2025 than in Q4, while Amazon, Meta, and Google are all expected to have lower growth in 2025 as compared to Q4.

• Meta has the highest 2025 EPS consensus estimate, while Tesla has the lowest.

• Yet, the 2025 percent earnings growth estimate for Tesla is the highest, while Google’s is the lowest.

But let’s zoom out for a moment—because as a group, the whole Mag 7’s profit growth has slowed significantly from its previous highs. In fact, this is projected to be their slowest pace of growth in two years.  

As a result, sentiment has started to shift across the board for these tech giants. The following charts highlight 2025 consensus earnings estimate revisions (meaning changes in earnings expectations), starting from 100 and sourced from Bloomberg, as a measure of shifting sentiment for the six firms reporting this week.

Those with positive momentum:

• Meta and Google have been benefiting from a boost in advertising revenue, as companies take advantage of AI tools to build and manage ad campaigns more efficiently.

• Amazon has benefited from their high-margin AWS cloud and advertising businesses, which are expected to continue.

Those with sentiment declines:

• Microsoft has seen sentiment take a hit due to concerns over the impact of M365 Copilot and slowing growth in its cloud-computing division, Azure.

• Apple is grappling with slowing iPhone sales, while a lack of significant AI announcements has weighed on its outlook.

• Tesla continues to face a debate of whether it’s an auto company or more, which has mixed reactions, despite its efforts to expand into other verticals.

And finally, a look at valuation: Valuation remains a critical factor for investors to consider. Amazon and Google, for example, are trading at forward price-to-earnings (P/E) ratios below their 5- and 10-year averages. On the surface, that might seem like a positive sign.

However, those valuations assume another year of exceptional earnings growth and big expectations for the billions of dollars these companies are investing in AI to turn into tangible results. This week’s earnings reports will be critical in revealing how these companies plan to monetize AI spending.

The Mag 7 remains one of the most fascinating groups to watch, but their path forward is anything but clear. As earnings season continues to unfold, the real question isn’t just if these stocks are worth their current prices. It’s also whether they can beat the high expectations set for them—and deliver results that justify higher valuations. 

To me, they are all large companies that make a lot of money, so there is power in that. But, there is more to life than the Mag 7.