Episode summary
Meta Delivers Lackluster Forecast & Microsoft's Cloud Unit Grows | Bloomberg Businessweek
Bloomberg Businessweek Daily
· · 55 min · Hosts: Carol Massar, Tim Stenovec · Guests: Ed Ludlow, Mandeep Singh, Kurt Wagner
Summary
Meta’s after-hours selloff centered on a third-quarter revenue outlook of $61 billion to $64 billion that came in below consensus, even as second-quarter revenue and ad revenue topped estimates. The bigger concern was spending: Meta narrowed its full-year capital-expenditure range to $130 billion to $145 billion, raised its lower-end expense outlook, and faced questions about whether AI infrastructure can ever produce enough return to justify the outlay. The host and guests said the company’s advertising core is still healthy, but margin compression, higher depreciation, legal costs, and shrinking free cash flow are making investors more cautious.
Microsoft moved the other way, rallying after better-than-expected cloud results. The company said Azure revenue grew 43% and that Microsoft 365 Copilot reached over 30 million paid seats, while one guest argued the key issue is whether Azure growth can keep pace with capex growth that is expected to remain very high. The discussion framed Microsoft as having a clearer AI monetization path than Meta because some of the AI contribution can be traced through cloud metrics and backlog.
The show also covered Qualcomm’s weak smartphone-driven forecast and ARM’s relatively steadier outlook, with both guests saying handset demand remains under pressure. Starbucks was mentioned as a consumer exception, with strong same-store sales and a higher outlook, but the main theme was that AI spending is increasingly separating winners with visible cloud monetization from companies still searching for a clear payoff.
Key takeaways
- Meta’s third-quarter revenue guide of $61 billion to $64 billion fell short of the Street, pressuring the stock after hours.
- Meta’s full-year capex outlook of $130 billion to $145 billion kept investor focus on whether AI spending can ever generate enough return.
- A guest said Meta’s operating margin drop from 43% to 31% is a major warning sign as costs and depreciation rise.
- Microsoft’s Azure revenue growth of 43% and 30 million Copilot paid seats reinforced a clearer AI monetization story.
- Qualcomm’s weak outlook suggested smartphone weakness and Apple-related business loss are still weighing on handset chips.
- ARM’s data-center exposure helped offset smartphone pressure, making its outlook look comparatively steadier than Qualcomm’s.
Notable quotes
“What is the thing that is moving the stock with Meta today”
“I mean just look at the margin degradation for Meta here. They went from 43% to 31% operating margin”
“Microsoft 365 copilot reached over 30 million paid seats”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. — This is Bloomberg Business Week Daily, reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Masser and Tim Stenc on Bloomberg Radio.
All right everybody, yes indeed you are listening to Bloomberg Business Week Daily and this is Carol Masser along with Tim Stenc. We've got Meta and Microsoft crossing the Bloomberg terminal.
I am going to Meta Platforms for shares are lower. The company did miss estimates in second quarter earnings per share. The company also raising the lower end of its expense outlook.
The company sees thirdarter revenue coming in at 61 to64 billion. The estimate was for $63.17 billion. The company also expects third quarter total revenue to be in the range of 61 to 64 billion.
As I mentioned, second quarter revenue did come in just above estimates at 60.8 billion. Second quarter ad revenue coming in above estimates at 59.36 billion. Second quarter earnings per share coming in below estimates at $618.
Family of Apps operating income came in significantly below estimates. Second quarter, Reality Labs operating loss coming in above estimates at $4.62 billion. Second quarter, Family of Apps revenue coming in again uh second quarter rather, Family Apps revenue coming in at $60 billion.
The estimates were $59 billion.
All right. As you mentioned though, shares of Meta uh platforms, we're looking at that stock trading down about 5% in the after hours. We're going to be looking for some commentary about the company looking to build out a cloud business. Let's go over to Microsoft. That stock up about 3% here in the after hours.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- meta forecast
- ai capex
- investor concerns
- microsoft cloud unit growth
- advertising revenue
Companies and tickers mentioned
- META
- MSFT
- Meta Platforms
- Microsoft
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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