Episode summary
Earnings Roundup: Meta, Microsoft & Qualcomm | Bloomberg Intelligence
Bloomberg Intelligence
· · 18 min · Hosts: Paul Sweeney, Carol Massar, Tim Stenovec · Guests: Ed Ludlow, Mandeep Singh
Summary
Microsoft’s after-hours rally was driven by stronger-than-expected cloud growth and fresh evidence that its AI products are gaining traction, even as investors still want more clarity on capital spending into fiscal 2027. The host and a guest said the market is watching whether Azure growth can stay near the pace of capex, and noted that Microsoft highlighted 30 million paid seats for 365 Copilot and more than $100 billion in annualized Azure revenue.
Meta moved the other way after a revenue outlook that came in below expectations and a sharp drop in operating margin, with costs up 55% and free cash flow “basically disappeared.” The guest said the company’s story is increasingly about whether AI can open enterprise revenue streams, since Meta’s core business is still advertising and its new opportunities may depend on renting infrastructure or building cloud-style services. The discussion also focused on whether rising depreciation, not just labor, is pressuring margins.
Qualcomm also disappointed, with a weak current-quarter profit forecast tied to component shortages, higher costs, and a softer smartphone market. The guest said handset demand looks worse than expected, with Qualcomm exposed to Apple, Android, China and memory-driven pressure, while ARM was steadier thanks to stronger data center exposure.
Key takeaways
- Microsoft’s cloud unit is still growing fast enough to support the stock, but the market wants proof that Azure growth can keep up with capex, the guest said.
- Meta’s operating margin fell from 43% to 31%, and the guest said higher capex and depreciation are now weighing on free cash flow.
- The host said Meta’s clearest upside may come from enterprise opportunities, including a possible cloud computing business, not just ads.
- Qualcomm’s weak forecast suggests the smartphone market is softer than expected, with pressure from Apple, Android and China.
- The guest said ARM looks comparatively stronger because its data center exposure is doing more of the work even though it still has smartphone exposure.
Notable quotes
“everything is in the cloud growth, better than expectations. And, you know, the math was really simple going into this”
“the street sees capex growing beyond 50%. Topline growth on Azure is 43% give or take XTAC”
“the operating margins didn't just come in significantly below uh consensus by about 4 percentage points, but costs are up 55%”
“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
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 three and a half% in the aftermarket. Uh you've got Meta under pressure. Ed Ledllo 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 on Microsoft? I feel like it's probably the most tangible, right? So, everything is in the cloud growth, better than expectations.
And, you know, the math was really simple going into this. They've just closed the book on their fiscal financial year. And the question still remains, when we get to the call, what does Microsoft tell us about the the capital expenditure growth into next year?
Because the street sees capex growing beyond 50%. Topline growth on Azure is 43% give or take XTAC. All the the street really wants to see is that pace of growth being near to capex growth, right?
It's a really simple equation, but going back to Alphabet, which is highly analogous. There's so much commentary here from Microsoft about traction with co-pilot like more data points that are just easy tangible to understand about how Microsoft's AI efforts are going right and then it's that's the stock reflecting that in after hours.
Is the 30 million paid seats a big deal for 365 copilot for Microsoft? — Yes, because it's versus 20 million at the end of March. Exactly what I'm pointing to. Um the other one is I think you guys mentioned this but like Nad Nadella was talking about Azure generating more than hundred billion in annualized revenue. You know remember Amazon went to that figure very early
You know in its in its kind of like growth of AWS.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- megacap tech earnings
- meta revenue forecast
- ai spending
- microsoft cloud growth
- qualcomm guidance and chip supply
Companies and tickers mentioned
- META
- MSFT
- QCOM
- Meta Platforms
- Microsoft
- Qualcomm
Watch the episode
Watch “Earnings Roundup: Meta, Microsoft & Qualcomm | Bloomberg Intelligence” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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