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Top Magnificent Seven stocks have pulled back in the past two weeks as the recent rally lost momentum and as the earnings season starts. The Roundhill Magnificent Seven ETF ended the week at $70.07, down by nearly 7% from the year-to-date high.

The ETF fell last week as Meta Platforms and Tesla released their earnings reports. Meta extended its sell-off and is now 18% below its year-to-date high after its results showed that free cash flow turned negative last quarter.

Tesla also pulled back as revenue from its electric vehicle and energy segments declined during the quarter. The drop was partly offset by growth in its Services and other segment.

Microsoft Earnings to Show Color on AI Spending

Microsoft stock ended last week at $524, a few points below this month’s high of $550. It remains 50% above the year-to-date low.

Benzinga data shows that analysts expect the upcoming earnings report will show that revenue jumped by 17% to $90 billion, with its earnings per share rising to $4.72 from $4.13 a year earlier.

Microsoft’s headline earnings will have a minimal impact on the stock. Instead, investors will focus on its capital expenditures and the return on investment in the AI space, especially its Copilot product. Its last earnings report showed that the company plans to spend between $175 billion and $190 billion this year.

Alphabet Earnings to Shed Light on Advertising Business and Capex

Alphabet stock has slumped to $317, down by 22% from the year-to-date high of $402.

The company’s earnings this week will provide more details on its performance. Analysts expect its results to show that its revenue rose by 25% to $127 billion, with its EPS moving to $2.97.

The stock will react to the performance of its advertising business, which generates most of its revenue. Also, it will react to its free cash flow as its AI spending continues.

It had a negative free cash flow of $5.85 billion in the second quarter, with management signaling that it will spend between $195 billion and $205 billion this year.

The results will also provide more hints on its Tensor Processing Unit (TPU) revenue, which BNP Paribas predict will hit $40 billion next year.

Amazon to Report Earnings as it Remains in a Correction

Amazon stock has slumped into a correction, moving from $287 in August to $248 today. The company’s results are expected to show that its revenue jumped by 12.2% to $202 billion, with AWS leading the growth.

Amazon’s stock will react to its free cash flow, which turned negative in the second quarter, and this trend may continue as it continues boosting its AI spending. It predicted that its AI spending will be $220 billion, an increase from the previously reported $200 billion.