After President Trump’s “Liberation Day” sparked uncertainty in the U.S. bond market, prompting Trump to reverse course and issue a 90-day pause, all attention has been on the trade war with China.
On that front, USG has been building a coalition of sorts to build up its leverage, most recently having courted India and Japan. Yet, even this buildup causes tensions as China warned that deal-making countries could be hit with retaliatory tariffs.
Altogether, this still leaves the US stock market in a suppressed state, with the S&P 500 (SPX) index down 8.3% over a month. It is in this volatile macro environment that the Magnificent 7 companies are scheduled to report quarterly earnings. For investors still looking for a dip, what should they take into account?
Tesla (NASDAQ: TSLA)
In early April, we covered extensively what it means for Elon Musk to generate political vulnerability and then transfer it to his only publicly traded company Tesla. Since then, it has been speculated that Musk will depart from his special government employee position as the head of the Department of Government Efficiency (DOGE).
Although Musk called such speculation “fake news”, a timely exit would certainly be beneficial for TSLA stock. After all, not only does street-level action against Tesla car owners act as a sales suppressant, but the U.S. legal system has eroded to such an extent it may not even be possible to prosecute caught assailants.
In the meantime, the ongoing tariff trade war should largely keep Tesla insulated from major negative effects, given the company’s domestic production relative to EV competitors. Suffice to say, Musk’s moves in the following few months will be critical. Although government reform may have sounded viable prior to election, it may be the case that the Trump admin is too weak to follow through.
Only Elon Musk knows if that is the case and if he should cut losses sooner rather than later. Tesla’s next earnings report for Q1 2025 is slated for 5:30 PM ET on April 22nd after market close. The estimated earnings per share (EPS) for Tesla to beat is $0.35, the same as in Q1 2024 when the company’s earnings matched expectations.
Over the last three months, TSLA stock is down 43%, currently priced at $235.67 per share. According to WSJ forecasting data, there is still a significant upside for Tesla stock, as the average price target holds at $327.40 per share.
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Alphabet (NASDAQ: GOOGL)
Alphabet’s Q1 2025 earnings are set for Thursday, April 24th, after market close. The company must beat EPS of $2.01 to please shareholders. In the year-ago quarter of Q1 2024, Alphabet reported EPS of $1.98 vs the estimated $1.49. In the prior quarter Q4 ‘24, the company beat earnings only slightly, with a positive surprise of 1.42%.
Over the last four weeks, downward EPS revisions outcompeted upward revisions by 3x, at only 2 up vs 6 down. Against the current price of $150.59, WSJ’s forecasting points to the average GOOGL price target of $203.17, with even the low estimate of $159 higher than the present price level.
This is not surprising given Google’s search engine dominance, record $10.47 billion ad revenue from YouTube in Q4 2024, and its wide ecosystem of apps. AI is clearly the next frontier in market positioning, as Alphabet allots “enormous sum of money” on a monthly basis for Samsung to preinstall Gemini app on its smartphones.
Moreover, following the image generation scandal in early 2024, which consistently failed to depict people of European descent, Gemini 2.5 Pro appears to be one of the most cost-effective LLMs.
With the deep ecosystem ready for Gemini’s adoption, GOOGL should be considered one of top AI stock exposures for long-term growth. Likewise, AI video generation is positioning to be one of the most disruptive technologies in recent memory, and no company has accrued more data to facilitate such training than Google.
Equally priced as OpenAI’s Sora, Gemini’s Veo 2 implements the understanding of physics to deliver more consistent results in object/character motion. On top of the autonomous driving subsidiary Waymo, Alphabet stock represents a relatively safe Big Tech exposure for significant gains in the next 12 months and beyond.
Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.
Which Mag 7 stock have you held for the longest? Let us know in the comments below.
About the author
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird’s US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
