Markets are bracing for one of the busiest and most consequential weeks of 2026 as Big Tech earnings collide with the Federal Reserve meeting. Corporate results from Microsoft, Meta, Tesla and Apple arrive alongside the Fed’s interest rate decision, creating a convergence of catalysts that could drive sharp market moves.
Figure 1: Investor analyses market data on a digital screen amid heightened market uncertainty. [Freepik]
The timing is critical. Big Tech earnings will test whether years of aggressive artificial intelligence investment are finally translating into meaningful financial returns. At the same time, the Federal Reserve meeting will offer guidance on how long borrowing costs are likely to remain elevated as inflation proves stubborn and economic growth shows signs of fatigue.
Big Tech Earnings Take Centre Stage in Earnings Season Highlights
Microsoft, Meta and Tesla report fourth-quarter earnings after markets close on Wednesday. Apple follows on Thursday after the bell, compressing some of the most important earnings of the season into a narrow window.
Wall Street expects Big Tech earnings to deliver around 20 per cent profit growth for the quarter. While still strong, this would mark the slowest pace since early 2023. Analysts caution that modest beats may no longer satisfy investors after years of premium valuations.
Microsoft’s results will be closely watched for updates on Azure. The cloud platform posted 39 per cent revenue growth in the September quarter, with expectations for 36 per cent growth in the December period. Any further deceleration could weigh on sentiment, given Azure’s central role in Microsoft’s AI strategy.
Meta also faces elevated scrutiny. The Company recently lifted its capital expenditure outlook, signalling heavier spending on data centres and AI infrastructure. Investors are now looking for clearer pathways showing how this investment converts into sustained profit growth.
Federal Reserve Meeting Likely to Hold Rates Steady
The Federal Reserve meeting on Tuesday and Wednesday is widely expected to result in no change to interest rates. Markets assign a 97 per cent probability that the Fed keeps rates in the 3.5 to 3.75 per cent range.
While the decision itself appears settled, attention will focus squarely on Chair Jerome Powell’s press conference. Policymakers remain cautious that premature rate cuts could reignite inflation pressures, even as labour market momentum cools.
Figure 2: Financial tools and currency symbols representing monetary policy and capital flows. [Freepik]
Economists have steadily pushed expectations for rate cuts into mid or late 2026. Powell’s tone on inflation progress, economic resilience and financial conditions will be critical in shaping near-term market expectations.
AI Spending Intensifies Pressure on Earnings
The earnings season unfolds against a backdrop of unprecedented capital spending by the technology sector. Microsoft, Meta, Amazon and Alphabet are collectively expected to deploy roughly US$475 billion in capital expenditures during 2026, more than double 2024 levels.
Microsoft has indicated that spending in 2026 will exceed the US$88.2 billion invested in 2025. Meta has also raised its spending range, reinforcing concerns that profit margins could remain under pressure.
Figure 3: AI-powered data centre infrastructure highlighting large-scale computing investment. [Freepik]
Investors are increasingly questioning whether this scale of spending delivers productivity gains or simply inflates costs. Data centre construction has drawn criticism over energy consumption, water usage and strain on power grids, adding political and regulatory dimensions to the debate. The scale of investment has become one of the defining earnings season highlights, shaping investor expectations for profitability and growth.
Market Leadership at a Crossroads
The so-called Magnificent Seven drove much of the market’s gains over the past three years. That dominance has weakened since late 2025 as investors reassess returns on AI investment.
An index tracking Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla peaked in October. Since then, five of the seven stocks have underperformed the broader market, with capital rotating into Companies supplying AI infrastructure rather than those funding it.
Figure 4: Bullish and bearish market indicators illustrating contrasting market sentiment. [Freepik]
Memory and storage producers have been major beneficiaries of this shift. Investors appear more comfortable backing firms with near-term revenue visibility than those absorbing massive upfront costs.
Timing Amplifies Volatility Risks
The Fed’s Wednesday press conference will occur just as Microsoft, Meta and Tesla release their earnings. This overlap compresses market reaction and raises the risk of exaggerated price moves across equities, bonds and currencies.
Markets have already shown heightened sensitivity to central bank messaging in recent months. Any surprise in Powell’s language could quickly amplify reactions to earnings outcomes.
This convergence means investors will be forced to digest monetary policy signals and corporate fundamentals almost simultaneously.
Why This Week Matters for Markets
Either Big Tech earnings or the Federal Reserve meeting alone would dominate market attention. Together, they represent the most concentrated stretch of market-moving events so far this year.
Strong earnings could restore confidence in technology leadership and justify ongoing AI investment. Disappointments, combined with hawkish Fed commentary, risk accelerating rotation into defensive or non-tech sectors.
With valuations still elevated and expectations high, markets appear primed for volatility as January draws to a close. Together, Big Tech results and policy signals form the core earnings season highlights as January draws to a close.
FAQs
Q1. When do Microsoft, Meta and Tesla report earnings?
Ans. Microsoft, Meta and Tesla all report Big Tech earnings after the market closes on Wednesday, 29 January 2026. Apple follows on Thursday after the bell.
Q2. Will the Federal Reserve cut interest rates this week?
Ans. No, the Federal Reserve meeting on Wednesday is expected to hold rates steady in the 3.5 to 3.75 per cent range with 97 per cent market probability.
Q3. How much are Big Tech Companies spending on AI?
Ans. Microsoft, Amazon, Alphabet and Meta are expected to spend roughly US$475 billion in capital expenditures during 2026, up from US$230 billion in 2024.
Q4. What earnings growth is expected for the Magnificent Seven?
Ans. Big Tech earnings are expected to show 20 per cent profit growth for the fourth quarter, which would be the slowest pace since early 2023.
