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The Mag 7’s Earnings Are in… and so Is the Tech Reset

Hello, Reader.

A lot can happen in 100 days.

The California gray whale migrates from the waters of Baja California, Mexico, to its summer feeding grounds in the Arctic.

You’re favorite HBO series could air an entirely new season, beginning to end.

Or, the U.S. could stumble into a trade war that sparks recession fears.

On Tuesday, we hit “Day 100” of President Donald Trump’s second term. And the following day, the Commerce Department reported U.S. GDP shrank by 0.3% in the first quarter, the first drop in growth since early 2022.

It is important to note, though, that while two quarters in a row of shrinking GDP is a key indicator of a recession, it’s not the sole determinant.

But the culprit behind the recent decline in U.S. GDP? In part, the trade war.

Businesses are getting nervous. And rightfully so.

No one knows where tariffs are headed. It’s an uncertainty that continues to spook investors. Ultimately, the S&P 500 slipped 0.8% in April, the Dow Jones Industrial Average dropped 3.2%, and both posted their third straight monthly loss. Only the Nasdaq Composite managed a 0.9% gain.

Now, as volatility increases, certain sectors are vulnerable to overbought conditions, meaning they may be overextended and poised for a potential mean reversion.

And this includes the tech sector.

As it happens, beyond Trump’s 100 days, this week also brought earnings reports from four of the “Magnificent Seven” tech stocks… the popular companies that I believe are primed for an impending crash.

So, in today’s Smart Money, I’ll first break down the Mag 7’s latest earnings reports. While the results were mixed, they shared a common theme: concern over the future of the trade war.

Then, I’ll share more about the tech reset that I see coming, what companies you should be looking for instead… and how you can find them.

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Earnings, Earnings, and More Earnings

Before we dive into this week’s big tech earnings, let’s take a look back at two Mag 7 stocks that reported earnings a little bit earlier…

Tesla Inc. (TSLA)

Tesla kicked off earnings season for the Mag 7 on April 22 – and it wasn’t pretty. Revenue fell 9% from the previous year to $19.34 billion, largely missing Wall Street’s $21.11 billion estimate. Earnings per share came in at just $0.27, well below the $0.39 analysts predicted.

Trump’s tariff plans have raised concerns about rising costs for key electric vehicle components, from battery cells and circuit boards to manufacturing equipment and glass.

In response to this impact, Musk claimed Tesla is “the least affected car company” when it comes to trade issues. However, Tesla refrained from giving 2025 guidance, citing ongoing uncertainties.

Alphabet Inc. (GOOG)

Two days later on April 24, Alphabet reported revenue of $90.23 billion and earnings per share of $2.81, surpassing analysts’ expectations.

AI advancements, including the rollout of Gemini 2.5, played a significant role in the company’s growth. The “Search and Other” segment grew 9.8% year-over-year, reaching $50.7 billion.

However, the tech giant anticipates potential challenges due to upcoming trade policy changes. Google Business Chief Officer Philipp Schindler stated that the changes will “cause a slight headwind to our Ads business in 2025, primarily from APAC-based retailers.”

That brings us to this week…

Meta Platforms Inc. (META)

On Wednesday, Meta stock rallied more than 5% after reporting earnings of $6.43 per share, compared to earnings estimates of $5.28 per share. Revenue climbed 16% year-over-year to $42.31 billion, topping expectations for revenue of $41.10 billion. Forward-looking guidance was also positive, as company management forecasts revenue between $42.5 billion and $45.5 billion.

The company remains optimistic about its AI moves. In fact, CEO Mark Zuckerberg noted that he sees “five major opportunities” for AI at Meta. The company will use the technology for “improved advertising, more engaging experiences, business messaging, Meta AI, and AI devices.”

Meta will also expand its AI infrastructure and plans to put some of its capital expenditures toward generative AI.

“Our business is also performing very well, and I think we’re well positioned to navigate the macroeconomic uncertainty,” Zuckerberg said on the company’s earnings call.

Microsoft Corp. (MSFT)

Shares of Microsoft opened about 9% higher on Thursday after the company announced earnings of $3.46 per share, beating analysts’ expectations of $3.22 per share. Revenue came in at $70.07 billion, which also topped the expected $68.42 billion. This marks the fourth quarter in a row that the tech giant beat Wall Street’s estimates.

The Intelligent Cloud segment, including Azure, saw a 21% revenue increase driven by AI demand. The company plans to invest $80 billion in data centers to support AI workloads, highlighting its commitment to AI infrastructure.

Apple Inc. (AAPL)

Also on Thursday, Apple announced second fiscal-quarter earnings with revenue of $95.4 billion and earnings per share of $1.65. Although the company beat estimates, shares dipped 4% in extended trading.

On the earnings call, CEO Tim Cook said the impact of tariffs was “limited” last quarter thanks to supply chain adjustments. The company warned that trade-related costs could rise in the coming months. It expects modest revenue growth this quarter.

Amazon.com Inc. (AMZN)

Amazon’s first quarter earnings surpassed expectations on Thursday when it reported earnings per share of $1.59, beating analysts’ estimates of $1.36 per share. Revenue of $155.67 billion also topped analysts’ estimates of $155.04 billion.

However, the company anticipates operating income between $13 billion and $17.5 billion, falling short of the $17.8 billion that analysts had projected. Amazon called out “tariffs and trade policies” as a factor that could make its guidance subject to change.

The final Mag 7 company – Nvidia Corp. (NVDA) – won’t report earnings until May 28.

Now, while all of these companies share concerns over the new tariff regime, they also have something else in common…

Surviving the Tech Reset

These big tech giants are trading at incredibly lofty valuations.

The median Mag 7 company trades at 27.9X forward earnings, or 55% higher than the median S&P 500 company. Looking at just one out of the seven, Meta is trading at 22X forward earnings, or 23% higher than the median S&P 500 company.

As I mentioned, overbought companies – like the Mag 7 – may be poised for potential mean reversions. That means America’s most popular tech stocks could come plummeting back to Earth, erasing years of investor profits.

So, with the risk of these overbought stocks correcting, it’s crucial to stay informed…

Like how the leaders of these companies – including Jensen Huang, Tim Cook, and Jeff Bezos – are offloading their own shares at a record pace.

In fact, according to a financial filing released just yesterday, Bezos disclosed a plan to sell up to 25 million shares of Amazon stock over a period ending May 29, 2026. (Bezos stepped down as CEO in 2021, but he remains the company’s top shareholder.)

However, there is a way to sidestep the incoming potential losses on overvalued stocks…

It’s by moving your money out of Big Tech and into the investments that the “top 1%” are piling into: “Next-Gen Stocks.”

Next-Gen Stocks are the next big “wealth transfer” in America, and they are converging with AI to bring about massive amounts of innovation to an industry that is estimated to grow globally to a $12.6 trillion value by 2030.

I put all the information that you need to know about coming tech reset – and these Next Gen Stocks – in a free, special broadcast that you can access here.

Regards,

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Tools of History

“King of Kings Ozymandias am I. If any want to know how great I am and where I lie, let him outdo me in my work.”

—Diodorus Siculus

Nations can go on… and on. The Chinese are still Chinese. The Turks are still in Turkey. And the French will always be with us.

But empires rise and fall, with a lifespan of only about 250 years, on average.

A visit to the imperial graveyard would show us tombstones of the Assyrians, the Medes, the Ashanti, the Aztec, Austro-Hungarians… and so on… and perhaps even the “two vast and trunkless legs of stone”described by Shelley.

They spoke different languages. They had different trade and immigration policies. Some were rich. Others were poor.

What they all have in common is that they are all dead. They sleep among the shades. They are all gone. Finished.

How do empires die?

The subject has been studied for many years. By historians. By poets. By religious nuts and scientific nerds.

Diodorus was on the case in the 1st century BC. He claimed to have found the inscription above on the tomb of Ramses II in Egypt, later inspiring Shelley’s famous poem.

And while there is no single answer as to what does them in, opinions converge on the two main empire killers… money and military. Too little of the former; too much of the latter.

In some cases, natural or demographic disasters play a role. But usually, the death of an empire has man-made causes.

“Man-made” disasters need leaders.

Alexander led his troops to the Ganges and to the Nile… thus installing a Macedonian dynasty in Egypt that Diodorus, a Greek from Sicily, was able to visit. He got there just in time.

The last of the Ptolemaic rulers was Cleopatra, who made the mistake of taking Marc Antony for a lover and ally. Ms. Cleopatra might be described as a “tool of history,” helping to put an end to the group that had ruled Egypt for 275 years.

Then, when Octavian defeated Antony at the battle of Actium, it was all over, not just for her and Antony, but for the Greeks in Egypt. Another empire – Roman – took over in 30 BC.

Which brings us, like fleas to a dog, to our own Donald J. Trump. He is the Big Man… the Caesar of today. L’etat..c’est lui!

We know what he says he is trying to do. His supporters (some of them) think he was spared by God to do it. But God thinks big. Long term. In historical terms, not limited to the election cycle. And at this stage of America’s empire journey – after nearly 250 years of sweeping all before it – we have to wonder… what is Donald J. Trump really meant to do? Take it to even greater glory? Or, to fulfill the natural life-cycle of all empires… that is, to help it into the past, not the future?

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If America were to develop into an even bigger, stronger empire it would first have to avoid going broke. That is a relatively obvious threat… and one that is relatively easy to avoid.

From the chief executive’s point of view, he would simply insist that henceforth outflows match inflows – something a hundred million American households are able to do every year.

He might even quote our old friend Sid Taylor in warning: “When your outflow exceeds your income, your upkeep is your downfall.”

Trump’s Treasury Secretary, Scott Bessent, said the administration’s goal was to shift resources away from the government so as to give the private sector a chance to grow. Were he really trying to take the empire to greater heights, Donald Trump would make that his Number One priority and veto any spending that added to U.S. debt. Then, the strength of the economy might power the empire to further success.

Of course, it would be up to Congress to decide where to cut. This, too, would be easy, in theory… though politically difficult. Small cuts to domestic spending programs, including means-testing social welfare/pension/medical care benefits, would be enough to bring homeland spending into line.

Easier still, the military/overseas spending could be cut in half – a savings of some $500 billion – simply by focusing on an America First homeland defense.

But in the press recently was this remarkable headline, the Daily Express:

Trump drops “Crimea will stay with Russia” bombshell and urges Ukraine to give in

What is amazing about this is not that Crimea should stay with Russia. It was originally annexed from the Turks by Catherine the Great in 1783… about the same time as the Americans “annexed” the colonies from the British empire.

What is shocking is that an American president should think it is his place to decide the issue.

Who elected him president of the Crimeans?

Does he speak any of the major languages of the peninsula?

Could he find it on a map?

Why then does he think it’s up to him to choose the government?

This is the kind of “imperial overstretch” that the gods punish. Along with big increases to the military budget… trade wars… chaos… incompetence… and deficits headed towards $2 trillion annually – it begins to look as though the real purpose of Team Trump were to destroy the empire, not to make it great again.

Could it be that Mr. Trump has unwittingly become a tool of history too?

More to come…

Regards,

Bill Bonner
Bonner Private Research