Large Tech earnings loom massive

A slogan related to Artificial Intelligence (AI) is displayed on a screen in Intel pavilion, during the 54th annual meeting of the World Economic Forum in Davos, Switzerland, January 16, 2024. 

Denis Balibouse | Reuters

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Stocks make weekly gains
The S&P 500 and Nasdaq Composite finished Friday slightly lower, ending a six-day winning streak. The blue-chip Dow bucked the trend, climbing 0.16%. Despite the mixed session, all three indexes finished higher on the week, thanks to encouraging economic data. The core personal consumption expenditures price index, the Fed’s favored inflation gauge, increased 0.2% in December bolstering investor confidence a day after fourth quarter GDP rose more than expected.

Tech layoffs surge
Silicon Valley’s tech companies are slashing headcount at a rapid pace. Since the start of January, some 23,670 workers have been laid off from 85 tech companies, according to the website Layoffs.fyi. Some are laying off staff in parts of the business to invest more heavily in developing AI products.

China ramps up pressure on Taiwan
Beijing has sent dozens of military aircraft and naval ships toward self-ruled Taiwan. The move came on the same day U.S. national security advisor Jake Sullivan met Chinese Foreign Minister Wang Yi, as both sides aim to stabilize U.S.-China relations.

U.S. crude oil notches best week
U.S. crude oil closed out its best week on Friday in more than four months, as robust economic data in the world’s two largest economies raised hopes for more strong crude demand this year. U.S. crude posted its best week, rising 6.27%, since Sept. 1, while the global benchmark was last up 6.35% for the week. WTI and Brent have each risen by more than 8% for the year.

[PRO] Is Tesla still attractive?
Kingsley Jones, CIO and founder of boutique advisory firm Jevons Global, isn’t bullish on Tesla’s stock, given its growing competition from China’s electric vehicle makers. Tesla will probably face margin pressure in the U.S. if it doesn’t get both its prices and costs down, Jones added, offering three alternatives.

The bottom line

This will be a big week for Wall Street’s Big Tech companies.

The majority of the so-called “Magnificent 7” will report results in the coming days: Alphabet, Amazon, Apple, Meta, and Microsoft.

With all the hype around generative artificial intelligence, it’s no surprise investor interest is riding high on Big Tech’s earnings.

Microsoft, including its competitors Meta and Alphabet-owned Google, hav ramped up efforts in AI technology to integrate its applications into their offerings. To win the AI race, Silicon Valley has already laid off more than 23,000 workers in January so far, as companies bet big on AI and invest more heavily in developing that tech.

Investors will be curious to see whether Big Tech’s AI investments and strategic layoffs bear fruit on the earnings front. 

The S&P 500 is trading at a record and the Nasdaq is at its highest in two years on Big Tech stocks. Alphabet shares reached a new pinnacle on Thursday, as did Microsoft, which ran past $3 trillion in market cap.

High profile earnings aside, the Fed’s policy meeting is also taking place this week. Investors don’t expect any rate move but will look for clues on when officials might cut interest rates.

— CNBC’s Ashley Capoot and Jonathan Vanian contributed to this report.

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