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The Big Tech trade is alive and well.
That's one lesson from this earnings season, in which the market's biggest tech companies are outperforming the rest of the S&P 500 despite tariff woes — or perhaps because of them — making what has been the market's hottest trade also now its safest.
Investors were reminded of that dynamic as they put up impressive earnings beats.
Excluding Nvidia (NVDA), which is set to report at the end of this month, earnings from the other six members of the "Magnificent Seven" surpassed consensus estimates by 16%, according to data from Bank of America published Monday. That's well above the more modest 4% beat that the rest of the benchmark index has registered so far.
This solid earnings showing from the tech giants has also lifted the S&P as a whole, which is set to exceed estimates for first quarter EPS by 12% over last year, according to BofA's equity and quant strategy team led by Savita Subramanian.
Sure, the tech sector is well off its highs from February. A gut punch from DeepSeek served as a painful reality check and offered an opening for an "I told you so" moment from market observers who have been critical of sky-high valuations.
But what's followed has been a push for US tech supremacy that appears to have bolstered the case for AI investments. "Hyperscalers confirmed an intact AI investment cycle," the Bank of America note read. True even if capital expenditures growth from these so-called hyperscalers is slowing.
During this earnings season, Google (GOOG) and Microsoft (MSFT) reiterated their spending plans.
Meta (META) raised its full-year capital expenditure estimate.
And Amazon (AMZN) highlighted that its AI business revenue continues to grow by triple digits year over year.
Overall, capex for the hyperscaler group grew by 62% this quarter compared to the same period last year, according to the note, with capex projected to rise by 35% for the year.
We wrote last week that the outlooks from Big Tech leaders would be even more important to the overall market than is typical.
With uncertainty stemming from Trump's tariff proposals still leaving investors and companies uneasy, this isn't exactly a business-as-usual moment. In many respects, forging ahead with ambitious plans in times of uncertainty is an outsized marker of success.