Wall Street faces another key litmus test Thursday with earnings results from megacap technology giants Apple and Amazon . The Nasdaq slumped 2% after Microsoft issued disappointing revenue guidance and Meta Platforms warned of heightened AI-related costs . Both tech giants fell Thursday, despite topping Wall Street’s estimates. Capital expenditures remain top of mind for investors on the hunt for signs of a payoff from these hefty investments. For Apple, Wall Street also wants to see its latest iPhone pick up steam, and investors seek more insight into when the company’s AI initiative will begin lifting sales. Meanwhile, analysts are searching for signs of a reacceleration in Amazon Web Services growth. Analysts polled by LSEG expect Amazon to post earnings of $1.14 per share on revenue totaling $157.2 billion. That would reflect about 10% revenue growth from the year-ago period. For Apple, Wall Street expects EPS of $1.60 on $94.58 billion in revenue. Amazon Oppenheimer’s Jason Helfstein referred to Amazon as the “most controversial” megacap heading into earnings. Along with the company’s capex plans, Wall Street wants to see proof that its Amazon Web Services cloud computing division is accelerating after a period of lagging growth, with analysts polled by StreetAccount expecting revenues for the unit to hit $27.52 billion. Jefferies analyst Brent Thill called the setup for the e-commerce giant “somewhat demanding” given the stock’s outperformance year to date and concerns of a disappointing operating income guide due to consumer weakness, AWS margin constraints and costs related to its Kuiper satellite project. Shares are up 22% in 2024. The company is expected to report $14.7 billion in operating income, representing 31% growth from last year. Amazon previously said that operating income would range between $11.5 billion and $15 billion. Thill views growing AWS growth as attainable, saying that “topline fundamentals look solid.” He expects AWS to accelerate to 20% in the third quarter and 21% in the current period, calling the valuation attractive at these levels. Recent results from Alphabet’s cloud division may represent a “positive read” for Amazon, according to Bank of America’s Justin Post. The search giant this week showed an acceleration in cloud revenue , which came in ahead of Wall Street’s estimates and grew about 35% from a year ago. “There is noise around near-term operating income, but we believe it is becoming well understood & we are encouraged by strong AWS growth & continued discipline throughout the business,” said JPMorgan’s Doug Anmuth. Goldman Sachs analyst Eric Sheridan also anticipates an ongoing ramp in AWS as AI workloads build, expecting the company to benefit from strong e-commerce demand and a booming advertising environment. He maintained the firm’s $230 price target, implying 19% upside from Wednesday’s close. Amazon’s retail business also remains top of mind for Wall Street ahead of the busy holiday shopping period. Improvements within the retail segment should help offset some higher costs from Amazon’s satellite project, said Citi’s Ronald Josey. “Amazon remains one of our top picks across the Internet sector and believe the rise in essentials, faster shipping, and improving conversion rates can deliver strong retail results as AWS demand continues to improve,” he wrote. Apple For Apple, Wall Street is eagerly searching for signs of strong demand for its latest iPhone model and updates on its AI strategy. Shares of Apple were dented earlier this year as investors fretted over the company’s lack of an AI strategy. That changed in September when the iPhone maker announced Apple Intelligence — which opened to consumers in beta testing mode this week. Analysts have expressed concerns over the iPhone 16 model and whether it could actually fuel the behemoth upgrade cycle previously expected, with Morgan Stanley analyst Erik Woodring calling demand “mixed.” Jefferies analyst Edison Lee assumed coverage of the stock earlier this month and downgraded shares to hold as he waits for the “Apple to ripen.” “We like Apple Intelligence LT, as AAPL is the only hardware-software integrated player that can leverage proprietary data to offer low-cost, personalized AI services. But smartphone hardware needs rework before being capable of serious AI, with likely timeline of 2026/27,” he wrote. Many analysts expect the technology giant to post in-line or stronger-than-expected results for the September quarter driven by strong services growth. The outlook for the current quarter, which ends in December, looks murkier. Despite an improvement in early sell-through data, the new model looks behind iPhone 15 figures from last year, noted JPMorgan’s Samik Chatterjee. The analyst lowered current-quarter revenue estimates, but anticipates an improvement into the new fiscal year as Apple Intelligence’s launch fuels demand. Many analysts view insight into this new AI strategy and when it could begin lifting demand as key commentary to watch for in the report, with D.A. Davidson’s Gil Luria noting that current data gives “little reason to believe an upgrade cycle has started.” Bank of America analyst Wamsi Mohan urged investors to “look past the iPhone 16 noise.” He called services revenue and gross margin expectations for the December period “too low” given strong early insight into its beta AI initiative launched this week. “As visual intelligence, ChatGPT integration and broader Apple Intelligence features become more mainstream and improved over time, the value of personalization will likely become increasingly relevant,” he wrote. However, some analysts think the new iPhone faces a tricky path ahead, with Barclays analyst Tim Long anticipating risks to shipment expectations for the March and June quarters. He holds an underweight rating on the stock and $186 price target, implying 19% downside from Wednesday’s close. “We believe AAPL had a more optimistic view of IP16 volumes after the June AI event, but actual sell through has been weaker given the negative data points,” Long wrote. “We now see more downside than upside risk to our Dec-Q estimate of 79M units.”