Mag 7 Earnings Breakdown: Buy, Sell, or Hold?

Four of the biggest companies in the stock market just reported earnings. Meta, Microsoft, Alphabet, and Amazon. I own all four, and in today's video, I'm going to be giving you a quick breakdown on the earnings, the postreport stock reactions, and finally, whether I rate the stock a buy, sell, or hold. As always, these are my opinions and my opinions only. Please do not take this as investing advice. All right, let's jump right into the beginning with Meta, which happened to be the worst reaction of the four. As you can see on your screen, shares of Meta are down 8% after reporting a solid double beat on both the top and bottom lines. But as you've heard me say a number of times, it's less about what you've done in terms of recent financial performance and more about what you're going to do in terms of forward guidance. We continuously see companies beat earnings, double beats, and see their stock price fall. And we have come accustomed to this. For those of you that are meta shareholders like I am, we saw this a few years ago when capex for AI really started to pick up. Investors got spooked and hit the sell button. From the 2022 lows, the stock has only gained roughly 540% rewarding those that don't invest emotionally and rather invest rationally. We have a company that is investing leading to higher revenues, higher operating profits, and bigger operating margins. These are the exact things we want to see as investors. Here's a look at the earnings from this week in which Q1 EPS came in at $1044 per share, easily beating expectations by $344. Q1 revenue came in at 56 billion, growing 33% year-over-year, beating expectations by 760 million. Ad impressions were up 19%. The average price per ad was up 12%. And Q2 revenue guidance was pretty much in line with expectations. So all of that sounds pretty good. What seems to be the problem? Bang. Meta hit us with the increase to their capex spending, raising their guide to between 125 to 145 billion this year, up 10 billion in terms of the midpoint from the prior guidance. That was rough for investors to take just because of the sheer number alone, but also bringing into questions ROI. This is a massive company with massive intentions. More than 3.5 billion people use at least one of their applications every day. That is a wild stat. But getting back to questioning around ROI or return on investment, it's a difficult stance to take considering expenses have been high and climbing for a few years. But when you look at these financials, they too are climbing. Revenues are at all-time highs. Operating profits at all-time highs. Operating margins are at 41% trailing only 2024 when margins reached 42% over the course of the past 7 years. Are you scared about the dollar size? Because you can't look at history and tell me investments aren't paying off. So for me, if you have no exposure to Meta whatsoever, this looks like a great buying opportunity. We have seen this playbook before. So from a rating perspective, I personally rate shares of Meta a strong buy. So with that, now let's move on to another stock, which is Microsoft. And Microsoft shares were also down post earnings, roughly 4%, bringing their 12-month return to essentially being flat. The stock was just recently finding some momentum, too, trading as low as $356, but finally regaining that $400 threshold. Microsoft has been the biggest lagard of all the Mag 7 stocks in 2026 with the stock down roughly 15% on the year as the software space in general has been under siege and in fact the stock has been read for 13 consecutive days on the day after they report. So 13 consecutive quarterly reports Microsoft shares have been read the next day. Looking here you can see that Microsoft just like Meta beat on both the top and bottom line. EPS of 427 beat by 22 cents per share. Revenues of 82.9 billion which was at 18.3% year-over-year growth beat handily by nearly $1.5 billion. The major focus for me though was Azure cloud and we saw that number grow 40%. Management believes that 40% growth rate should be the same in the next quarter as well. So that was definitely a positive. Azure is a core piece of the business, not because of this year's size of revenues, but it's also a very high margin business with 64% margins. Microsoft's PC related business though was weaker, but overall a very solid quarter for the company. Looking here now at valuations, it's wild to see the stock trading with a forward P that sits at just 23 times. Just a few years ago, Microsoft was above 35 times. EV to Ebida sits at 15 and a half, the lowest since before the pandemic. This is a stock in my portfolio and although my concerns are the highest with this one of the four we are looking at today, the prices are quite compelling purely on valuations alone. So with that, I would rate Microsoft shares a buy. Now let's move on to my two largest holdings inside my portfolio with Amazon and Alphabet. Let's begin first with Amazon. Amazon reported what I thought was a great quarter, second best in fact, trailing only Alphabet. But the problem with the stock, as I mentioned inside my investing community, is the fact that the stock had a huge run into earnings, which further raises the bar. In the month of April alone, shares of Amazon have climbed nearly 30%. So with that type of performance, earnings were going to have to be dynamite, and they weren't too far off. After reporting, shares remained pretty muted, beginning the day in the red, but seessawing to the green in the afternoon. Continuing with the theme, Amazon beat on both the top and bottom line pretty easily. EPS came in at $2.78, beating by a $1.13 per share. Revenues grew 16.6% to 181.5 billion, beating by more than $4 billion from analysts expectations. It's wild to think about the amount of revenue a company like Amazon generates in just 3 months. 181 billion is more than the entire market caps of CrowdStrike, Starbucks, Boeing, and Lowe's. But when it comes back to the reports for this particular company, AWS was a key watch point, and it grew 28% year-over-year. So, where are the issues, you might ask, if there are any? Well, like Meta, Amazon is a big spender right now. And looking at this chart, you can see the company's free cash flow has now dipped into the red or negative as they are now spending more than they're generating in terms of operating cash flow. Not something we investors like to see, but also can't say I'm surprised. The company has done this in the past, building out their e-commerce distribution centers, building out their AWS capacity, and now AI. What was the one key bright spot for Amazon in the quarter? It was their custom tranium chips, if I had to choose just one. to which the CEO noted on a standalone basis today would be a $50 billion revenue company which would actually make them a top three data center chip business in the world. This doesn't just happen. It happens because of prior investments. And as investors, you have to ask yourself, do I trust management? Yes, the capex budgets are massive. No question. But what is the company's track record? For Meta, you could look both ways because they have burned cash with their reality labs in the past. But of late, they've been much better. Amazon though, they've been fantastic. And I'm putting my money on CEO Jasse. Hence why I have been building my position into a top three holding in my portfolio for the past few years. And if you want to see my entire portfolio or option plays, join my investing community, the Stock Investors Edge, where we just rolled out a brand new valuation website. Join today using the link in the description below. But getting back to Amazon, look at this chart. how much progress they are making as a company. Revenues all-time highs, operating profits are at all-time highs, and operating margins are at all-time highs. Not just a company that's growing, but growing and doing it efficiently. There's so much to like about this company, and they're also a very diversified company having many different levers to pull, whether it's e-commerce subscriptions cloud chips robotics, AI, and the list goes on. Now, let's take a look at valuations. and they're not as low as they once were when I was telling you to buy a few months ago with the stock below $200 per share, but still reasonable with a forward PE of 32 and a half times and an EV to IBIDA at 18.7 times. So, when it comes to rating this stock, I will currently rate them a buy slightly leaning towards hold largely due to the fact that it's already one of my three largest holdings. So with that, now let's finally get to Alphabet, which for those of you that track my portfolio, you know, is my largest holding. And you know, I was buying heavily when the stock was trading at just 17 times earnings. Post earnings though, shares of Alphabet were having one of their best days, up 9% on the day after reporting a dynamite quarter. Yes, we saved the best for last. This is a company firing on all cylinders, led by a CEO that doesn't need to be in the spotlight like some others. Shares are up 140%. the past 12 months alone and up nearly 25% on the year. During the quarter, Alphabet actually missed on earnings by just 1 cent. Revenues beat at nearly 110 billion. Google Cloud though was impressive with a big beat and revenues rising to 20 billion on the quarter, but YouTube ads were actually soft. The revenue growth of 20% for the company was the highest rate we have seen since 2022. And the company's Gemini AI saw paid monthly active users grow by 40%. This was a company that fumbled AI out of the gate. Investors thought they were toast, but not me. But when it comes to capex, like we've seen with the other companies, capex guidance did in fact increase, but only by $5 billion more than the prior guidance. Just a mere 5 billion. A drop in the bucket for this behemoth. So what is driving all of these gains? A dynamite quarter is first. But on top of that, the company saw their backlog surge to more than $460 billion. They are constrained with demand higher than capacity. A great problem to have. After these most recent earnings, we now have valuation approaching a 30 times multiple. And after a move like this, with it being my largest holding, as much as I love this company, I won't be adding shares at the current levels. So therefore, I will rate it a hold. I would look to sell some lower cash secured puts though on the name to get in at a better price. And I recently shared a similar strategy on Alphabet in this video you see at the top of the screen. So be sure to check that out after this video. So with that being said, a little bit different video than normal, but I have received a lot of questions and I figured why not just put it into a video for you today instead of the live show. So I hope you enjoyed and if you did, show your appreciation by just simply clicking that like button down below. Subscribe to the channel so you're notified anytime we drop new content. And with that being said, we'll see you in the next one. Take care.