Episode summary
Instant Reaction: Microsoft, Meta Shares Slip After Earnings | Bloomberg Intelligence
Bloomberg Intelligence
· · Hosts: Paul Sweeney · Guests: Anurag Rana, Ivan Feinseth
Summary
Microsoft and Meta both sold off after earnings because investors focused less on headline beats and more on spending, taxes, and the durability of AI returns. Microsoft reported fiscal first-quarter revenue of $77.67 billion, adjusted EPS of $3.72, and Azure growth of 39% excluding currency effects, but the stock still fell about 3% to 3.5% as the market fixated on capital expenditures of $34.9 billion including leases, far above the prior quarter’s $24 billion. The discussion centered on whether that spend signals strong AI demand or a margin risk that needs more explanation on the call.
Meta dropped even more sharply after reporting third-quarter net income of $2.71 billion, pressured by a one-time non-cash tax charge of $15.93 billion tied to the One Big Beautiful Bill Act. Without that charge, the guest said net income would have been $18.64 billion. The host and guest also focused on Meta’s warning that capex dollar growth will be notably larger in 2026 than 2025, even though third-quarter ad revenue of $50 billion beat estimates. The guest argued the tax hit is mostly an accounting issue, and that higher AI spending remains a long-term positive.
Alphabet moved the other way, rising about 6% after another strong cloud read and higher capex plans, reinforcing the broader debate that the biggest cloud and AI platforms are still leaning into infrastructure spending despite near-term investor discomfort.
Key takeaways
- Microsoft beat on revenue, EPS, operating income and Azure growth, but the market reacted to the jump in first-quarter capex to $34.9 billion.
- The guest said Microsoft’s 39% Azure growth and higher margins suggest demand is still strong, not that spending is getting out of hand.
- Meta’s reported $2.71 billion in net income was distorted by a $15.93 billion non-cash tax charge, and the guest called the hit an accounting issue rather than a fundamental problem.
- Meta’s warning that 2026 capex growth will be notably larger than 2025 revived investor worries about AI spending and margin pressure.
- Alphabet’s post-earnings rally suggested investors still reward cloud and AI infrastructure names that show strong demand and willingness to spend.
Notable quotes
“Microsoft reported revenue for the first quarter or Azure and other cloud services revenue XFX for the first quarter that beat the average analyst estimate”
“We thought there was going to be pressure on margins because of all the spending”
“Meta says it expects a significant reduction in our federal US federal cash tax payments for remainder of 2025 and future years”
“I think this is really a non-event. It's an accounting issue and I think any weakness is a buying opportunity in the stock”
How the episode opens
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From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai infrastructure spending
- microsoft azure growth
- meta ai capex outlook
- tech earnings market reaction
- federal cash tax changes
Companies and tickers mentioned
- MSFT
- META
- Microsoft
- Meta Platforms
- Tigress Financial Partners
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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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