Photo Serge Nussbaumer © Maverix

By Serge Nussbaumer, head of public solutions and capital markets expert at Maverix Securities

Last week’s trading session made it clear which factors are currently driving financial markets.

On the one hand, the US Federal Reserve reaffirmed its cautious monetary policy; on the other, three of the world’s largest technology companies — Microsoft, Meta, and Apple — reported their quarterly results. Taken together, these developments point to a clear conclusion: conditions remain fundamentally supportive for equities, but the market’s demands on companies continue to rise. Elevated valuations are being accepted — provided, however, that investments consistently translate into revenue growth, earnings expansion, and sustainable cash flows.

Several important signals also emerged on the macroeconomic front. The Federal Reserve left its policy rate unchanged and reiterated its data-dependent approach. The latest PCE inflation figures confirm that price pressures continue to ease, even if the inflation target has not yet been reached. At the same time, the US economy is proving remarkably resilient: the labour market remains solid, household consumption continues to grow at a healthy pace, and corporate investment remains elevated. This gives the Fed the flexibility it needs. Rate cuts remain possible before year-end, but they will be driven not by caution alone, but by economic developments themselves. For financial markets, this means above all one thing: monetary-policy uncertainty is gradually receding, and attention is shifting back to corporate fundamentals.

It is precisely against this backdrop that earnings season set new benchmarks this week.

Microsoft delivered, in our view, the most convincing figures. Its cloud business accelerated further, with Azure benefiting especially from rising demand for AI applications. Even more striking than this growth is its quality: Copilot and other AI services are expanding faster than many market participants had expected, while Microsoft continues to invest tens of billions in data centres and AI infrastructure without sacrificing exceptionally high margins, cash flows, or returns on capital. The company is thus providing the most compelling evidence yet that AI can already be monetised successfully — emerging as the benchmark against which the entire sector must now be measured.

Meta also impressed across the board. Its core business, digital advertising, remains extremely dynamic and generates enormous free cash flow, which is, in practice, financing the historically high expansion of its AI infrastructure almost on its own. Management has also announced a further substantial increase in spending on data centres and AI capacity. Just a few quarters ago, the market would likely have viewed such higher capital expenditure critically; today, however, the reaction is far more relaxed — a reflection of the company’s operational strength. Meta is showing that high investment and earnings growth can go hand in hand, and it is precisely this combination that is strengthening confidence and giving the company a strategic edge in the global AI race.

Apple reported solid quarterly results and once again confirmed the extraordinary stability of its business model. Demand for iPhones, Macs, and services proved stronger than many had expected. Still, Apple is also the company facing the highest strategic expectations within the “Magnificent Seven”: while Microsoft and Meta can already point to concrete economic successes tied to their AI strategies, the market is still waiting for Apple’s next major growth step.

There is no doubt that the company has one of the most powerful ecosystems in the world and an exceptionally loyal customer base. What will matter, however, is how quickly Apple can turn its AI initiatives into new products, additional services revenue, and higher earnings. The stock market rewards business-model stability, but it now also expects identifiable growth drivers.

Overall, this earnings season points to a notable shift. Two years ago, the emphasis was still on future visions, technological possibilities, and long-term market potential. Today, capital markets are far more demanding: investors want to see that billions in investment are generating measurable economic returns. Artificial intelligence remains, without question, the key structural growth driver of the years ahead — but ambitious investment programmes alone are no longer enough. Scalability, operational excellence, rising free cash flow, and disciplined capital allocation are now the decisive factors.

For investors, the conclusion is clear. The current market environment continues to favour companies with structural growth, high profitability, and durable competitive advantages. Market leaders with pricing power, strong balance sheets, and the ability to monetise innovation successfully should continue to consolidate their dominant position. At the same time, the market is becoming more selective: companies whose valuations rest primarily on long-term expectations will come under pressure more quickly if operational progress fails to materialise.

We view this development as healthy. The current earnings season confirms that quality is once again being rewarded more than mere growth promises. For long-term investors, the key question is therefore not whether companies are investing in artificial intelligence, but which firms will use it to deliver sustainably higher profits, rising cash flows, and above-average returns on invested capital. In our view, that is precisely where the most attractive return opportunities will emerge over the coming years.

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