This week is essential not only because of the central bank meetings (from the US, UK, and Japan) but also because of the quarterly earnings reports of the major technology companies.

Results from Apple, Amazon, and Microsoft will be released, and there is always room for surprise. Investors expect these reports to exceed revenue and earnings expectations.

Another critical factor to watch is the performance of massive investments in artificial intelligence technologies. Are these investments paying off or doing as poorly as Alphabet?

If companies show strong results but provide poor guidance at the same time, it can negatively impact the market, pushing the Nasdaq and S&P 500 further down and further reorienting towards small caps.

What does the market expect, and which companies should beat it?

For Microsoft, earnings per share are expected to be $2.94 on revenue of $64.5 billion, up from $2.69 on revenue of $56.2 billion for the same period last year.

Cloud revenue is expected to reach $36.8 billion, and revenue from the intelligent cloud, which includes Azure, is expected to reach $28.7 billion. Of course, investors should be eager to see how AI performs.

Finally, it is essential to see how much more the company plans to invest in technology. If Capex exceeds expectations in areas that do not yet generate significant revenue, this could worry investors.

Given their substantial investments, Meta Platforms and Amazon (NASDAQ:AMZN) will face similar scrutiny. Investors will seek evidence that AI is making a real difference to revenues.

Apple recently revealed that it is delaying the rollout of AI capabilities until October 2024. The critical question is how they will explain this in their upcoming reports.

What to expect next?

Buying stocks before earnings reports is always risky, whether they are tech giants or smaller companies, especially if you don't have inside information.

If all the major tech companies report disappointing results, the correction of the major indices could continue. However, for a significant turnaround to occur, something more substantial would be needed.

For example, if Fed Chairman Jerome Powell indicates that inflation progress is slowing and rate cuts could be delayed, this could affect the market. However, this scenario is quite unlikely.

On the other hand, if the rest of the “Magnificent Seven” do not disappoint, it could boost not only the Nasdaq but the market as a whole, potentially increasing the overall appetite for risk.