This is one of the four busiest weeks of the year when five of the Magnificent 7 that dominate the markets report 3Q25 earnings. It started Wednesday afternoon with Microsoft (MSFT), Google (GOOG/GOOGL) and Facebook (META) and continues Thursday afternoon with Apple (AAPL) and Amazon (AMZN).

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These reports are especially important at this juncture because it’s these 7 stocks that are pulling the market higher while the rest of the S&P essentially treads water as can be seen in the growing gap between the SPY and and RSP in the chart above from BeSpoke Investment. Indeed, Tuesday had the worst breadth for an up day of any day since 1990! What that means is that the strength in the mega caps outweighed weakness across the rest of the S&P.

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This weak market breadth places extra weight on the earnings reports of the Magnificent 7. In focus today is META which is currently down almost 9% in the premarket after guiding to a huge increase in expenses in 2026.

2025 expenses are forecast to come in between $116-$118 billion, representing a 22%-24% increase from 2024. And here’s what META said about 2026:

We anticipate total expenses will grow at a significantly faster percentage rate in 2026 than 2025, with growth driven primarily by infrastructure costs, including incremental cloud expenses and depreciation. Employee compensation costs will be the second largest contributor to growth, as we recognize a full year of compensation for employees hired throughout 2025, particularly AI talent, and add technical talent in priority areas

Let’s do some hypothetical calculations. If 2025 total expenses come in at $117 billion that would represent a 23% increase over total expenses of $95 billion in 2024. And 2026 total expenses will grow at a “significantly faster percentage rate” than the 23% in 2025. Let’s say that means 33% which would work out to $155 billion. Obviously that kind of increase in expenses is going to crush META’s margins and profitability. I’m all for investing for the long term but clearly these numbers are making Wall Street nervous.

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Last, I’ve been waiting to comment on the mini crash in gold and the gold miners. Personally, I used it as a buying opportunity for a couple of reasons. One, the GDX seems to be finding support at its 50 DMA which makes this look like a standard correction in an ongoing bull market.

Two, fundamentally the miners are essentially printing money with gold around $4000/oz. In its 3Q25 earnings report last week, Newmont (NEM) reported an almost $2000 per ounce margin between its average realized gold price ($3539) and its All In Sustaining Cost/Oz. ($1566). As a result, Adjusted EBITDA increased 68% from 3Q24 to $3.3 billion. If they can maintain this, they’re looking at about $14 billion in Adjusted EBITDA on an annual basis with an $87 billion market cap or a 6x multiple.

The same thing applies to Agnico Eagle (AEM) which reported 3Q25 earnings Wednesday afternoon. AEM’s average realized gold price was $3476 and its All In Sustaining Cost/Oz. $1373. That resulted in a 67% increase in Adjusted EBITDA to $2.1 billion. Once again, with a market cap of $79 billion, the valuation here remains very attractive.

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