Meta Platforms (META) is set to report its second-quarter 2025 earnings on Wednesday, July 30, after the market close. Analysts and investors will be closely scrutinizing the results, particularly given Meta's aggressive investments in Artificial Intelligence (AI) and the ongoing challenges in the digital advertising landscape.

Meta expects second quarter 2025 total revenue to be in the range of $42.5B-45.5B. Consensus estimates call for Meta’s Q2 earnings per share to rise nearly 13% YoY to $5.83.

Meta's recent bottom-line performance has been especially impressive. A combination of double-digit revenue growth and significant operating margin expansion has led to explosive growth in earnings per share. For instance, first-quarter revenue rose 16% year over year to $42.31 Billion while operating margin expanded from 38% to 41%, resulting in earnings per share of $6.43, up 37% from the year-ago period.

Meta Platforms reported family daily active people, or DAP, was 3.43B on average for March 2025, an increase of 6% year-over-year. Ad impressions delivered across the family of apps increased by 5% year-over-year. Average price per ad increased by 10% year-over-year.

The stock has risen 22% year to date as of Monday’s closing price and sits just 4% below its all-time high of $747.90 from late June. The option market is pricing in a one-day move of +/- 5.2% ($37.50). During Meta’s 2Q earnings call, we will get to hear more about the recent AI talent headhunting that the Mark Zuckerberg-led company has done.

Moreover, the company might talk about its investment in Scale AI, in which it took a 49% stake last month, hiring its founder, Alexandr Wang, along with other key employees in the process.

Traders will also look for color on the Superintelligence Labs unit that Meta has created, and how the models that it will develop will be differentiated from its Llama models. Meta's significant investment in AI infrastructure, with a planned capital expenditure of up to $72 billion in 2025, will be a major focus.

Microsoft (MSFT) is also set to release its fourth-quarter fiscal year 2025 earnings after the market close on Wednesday, July 30th. Investors will be closely watching for strong performance across Microsoft's key segments, especially Intelligent Cloud, with particular attention to Azure's growth driven by artificial intelligence initiatives.

The Zacks Consensus Estimate for revenues is pegged at $73.71 billion, indicating growth of 13.88% from the figure reported in the year-ago quarter. The consensus mark for earnings has remained steady at $3.35 per share over the past 30 days, suggesting 13.56% year-over-year growth.

Analysts anticipate that Azure will remain the star performer, with growth projected between 34%-35% in constant currency. This acceleration is driven by the increasing adoption of AI services within the platform. Microsoft's substantial investments in AI infrastructure, including an estimated $80 billion for fiscal year 2025 data center expansion, are expected to facilitate continued growth in Azure.

Microsoft's relationship with OpenAI and its $13 Billion investment will be a key focus for investors, especially following OpenAI's recent compute deal with Google Cloud. Investors will be interested in how this partnership, which involves Microsoft's significant investment and a revenue-sharing agreement through 2030, will evolve and contribute to Microsoft's overall AI strategy and revenue streams.

Adoption of Microsoft 365 Copilot is expected to continue, with management anticipating approximately 14% constant currency growth in commercial cloud revenue. New features like Microsoft 365 Copilot Tuning and Azure AI Foundry Agent Service are expected to contribute to growth in this segment.

Microsoft shares are up 21% this year and sit just 1% off its all-time high from last week as of Monday’s closing price. The option market is pricing in a muted +/- 3.5% move ($18.00) post earnings. On a technical basis, the Relative Strength index (RSI) sits near the 70 level and is overbought on this metric.

The bar is high for these Mag 7 stocks going into earnings and could set the tone for a heavy week for quarterly reports. With a high bar, beat and raise quarters may be the only way Microsoft and Meta continue their bullish trends. But I would ponder if dip buyers may come in quickly if either of the stocks fall post-results.

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