ZACKS·2026-01-26 22:10Core Insights - A significant week of earnings results is anticipated for major hyperscalers Meta Platforms (META) and Microsoft (MSFT), both of which have underperformed the S&P 500 over the last three months [1][5]. Financial Performance - Both META and MSFT have shown stable sales and EPS revisions, with META's earnings expected to increase by 1.6% and MSFT projected to see a stronger growth rate of 20% [7]. - MSFT's revenues are expected to rise by 15%, while META's revenues are forecasted to grow by 20.7% year-over-year [7]. Advertising and Revenue Metrics - META is expected to generate $56.8 billion in ad revenue, reflecting a 21% year-over-year increase, which aligns with recent performance trends [10]. - MSFT's Intelligent Cloud revenue is estimated at $32.4 billion, indicating a robust 27% year-over-year improvement, driven by the expansion of its Azure platform [15]. Market Sentiment and Analyst Outlook - Analysts have not significantly raised their expectations for either company, but the stability in EPS and sales revisions is viewed positively [8]. - MSFT currently holds a Zacks Rank 2 (Buy), which supports a strong earnings outlook [8][17]. Capital Expenditures and AI Focus - Both companies are expected to discuss their AI outlook extensively during earnings calls, with capital expenditures related to AI being a major focus [6][16]. - The increase in capital expenditures for both companies is anticipated to pay off, particularly in the context of their AI investments [14].