Episode summary
Earnings Roundup: Meta, Microsoft & Qualcomm | Bloomberg Daybreak: US Edition
Bloomberg Daybreak: US Edition
· · 22 min · Hosts: Carol Massar, Tim Stenovec · Guests: Ed Ludlow, Mandeep Singh
Summary
Meta Platforms, Microsoft and Qualcomm all moved sharply after earnings, but the market reaction split around AI spending discipline and near-term growth. Microsoft rallied after its cloud business and Azure growth beat expectations, reinforcing the view that enterprise demand for AI and cloud infrastructure is still translating into sales. The discussion centered on whether Microsoft can keep capex growth in step with Azure growth, and on how much more transparency investors will get on the company’s AI economics.
Meta disappointed investors despite revenue that beat estimates, because its margin profile deteriorated and its forward revenue guide looked light versus expectations. The company’s costs rose 55%, operating margin fell from 43% to 31%, and free cash flow was described as basically gone. The host and a guest focused on whether Meta’s AI push is opening enterprise opportunities, including a possible cloud-computing business, but the near-term story was still one of heavy investment and pressure on returns.
Qualcomm also sold off after giving a weak current-quarter profit forecast, with component shortages, memory costs and smartphone weakness weighing on the handset business. A guest said the deterioration looked worse than expected, especially given exposure to Android in China and slower-than-modeled Apple business. Arm was relatively steadier, helped by its data-center exposure and stronger-than-expected demand for its chip lineup.
Key takeaways
- Microsoft’s after-hours rally was driven by stronger-than-expected cloud growth, with Azure at 43% growth and Copilot seats rising to 30 million from 20 million.
- Meta’s stock fell because operating margin dropped to 31% from 43% and costs rose 55%, even though revenue and ad pricing improved.
- Meta boosted the low end of its annual expense outlook to $165 billion to $169 billion, reinforcing investor worries about AI spending and depreciation pressure.
- Qualcomm’s weak forecast suggested the smartphone market is deteriorating faster than expected, with component shortages and higher costs still biting.
- Arm’s data-center exposure helped offset smartphone weakness, while Qualcomm remains more exposed to handset demand and memory pricing pressure.
Notable quotes
“everything is in the cloud growth, better than expectations”
“The story was how is AI made that better, more monetizable”
“costs are up 55%. So, the operating margin has fallen from 43 to 31”
“AI is accelerating our core business today, powering our next generation of products, and opening the door to entirely new enterprise opportunities”
“I would say in the smartphone market, it seems worse for Qualcomm than we thought”
How the episode opens
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Bloomberg Audio Studios. Podcasts, radio, news. — This — Is a breaking news update from Bloomberg. Instant reaction and analysis from our 3,000 journalists and analysts around the world. — Big tech earnings, Microsoft rallying 3 and 1/2% in the after market. Uh, you've got Meta under pressure. Ed Ludlow is host of Bloomberg Tech on Bloomberg Television, 11:00 a.m. Wall Street time, Monday through Friday. Ed, uh, pick where you want to start.
Should we start with Microsoft? I feel like it's probably the most tangible, right? So, everything is in the cloud growth, better than expectations.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- meta earnings
- microsoft cloud growth
- qualcomm profit forecast
- ai spending
- semiconductor supply costs
Companies and tickers mentioned
- META
- MSFT
- QCOM
- Meta Platforms
- Microsoft
- Qualcomm
Watch the episode
Watch “Earnings Roundup: Meta, Microsoft & Qualcomm | Bloomberg Daybreak: US Edition” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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