US100 dips 1.1% despite strong Microsoft earnings results 📊Meta Platforms with partially disappointing guidance

Futures on Nasdaq 100 (US100) lose 1.1% today after very important earnings releases from Magnificent 7 large caps, Microsoft (MSFT.US) and Meta Platforms (META.US). 

Microsoft (MSFT.US) - shares are up almost 1% in US after-hours trading

• Revenue: $65.6B vs $64.51B exp. 14.2% YoY (16% YoY)
• Earnings per share (EPS): $3.30 vs $3.03 exp. (net income at $24.7 billion, 11% YoY)
• Microsoft Azure and other cloud services revenue: $38.9B vs $38.11B (33% YoY, Ex-FX); Intelligent Cloud revenue up 20% YoY to $24.12 vs $26.68B exp.
• AI contributed 12 points to Azure revenue growth. Gross and operating margin, both down YoY by -2 p.p and -1 p.p respectively
• Productivity and Business Processes revenue up 12% YoY to $28.3B vs 23.79B)
• Intelligent Cloud: $24.1B (Est. $26.68B) ; UP +20% YoY  Azure and Other Cloud Services: +33% growth (Ex-FX)
• Personal Computing revenue up 17% YoY to $13.2B vs $13.92B exp.
• Gaming revenue up 43% YoY (Activision Blizzard acquisition); Investors expect better Copilot+PCs sales perspectives, amid lower cyclical PC market sales.
• Xbox hardware revenue down almost 30% YoY, but Xbox Content & Services up 61% YoY; in-line with estimates
• Markets see strong earnings as a signal that AI is really improving overall Microsoft business, driving product sales. 

The markets see Microsoft's good report as a signal that artificial intelligence is really improving Microsoft's overall business, driving product sales. This is evidenced by the positive impact of AI on the Azure business indicated by the company itself. On the other hand, the company has made Wall Street accustomed to very strong results, making it hard to rock the euphoria of even such a solid report. 

Microsoft (MSFT.US, D1 interval)

Source: xStation5

Meta Platforms (META.US) - shares are down 3% in after-hours trading

• Revenue: $40.59B vs $40.25 exp.(18.8% YoY) and $34.15B last year
• Earnings per share (EPS): $6.03 vs $5.25 exp. (net income up 35% YoY to $15.69B)
• Family of Apps daily active users' growth at 5% YoY, reaching 3.29 billion; MetaAI monthly active users at 500 million
• Meta raised midpoint FY2024 CAPEX from $38-40B ($37-40B previously) trimming total expenses to $96-98B ($96-99B previously) - a good sign for AI hardware providers
• The company sees Q4 sales from $45B to $48B vs $46.09B Wall Street estimates. Also, operating expenses came in up 14% YoY
• Meta expects further loses in Reality Labs (Metaverse/VR segment) commented also that regulation in US / EU markets can impact its future performance
• Zuckerberg signalled a good quarter 'driven by AI progress'; MetaAI, Llama adoption and AI glasses
• The company expects 'significant capital expenditures' growth in 2025 accelerated by infrastructure spending
• Despite strong growth dynamic and huge uptick in net income, markets are partially disappointed with the company sales guidance

Meta is improving profitability and is certainly one of the companies where the impact of AI on real business is actually already visible. It is worth noting the rather dynamic for the scale of the business growth of Family of Apps users (Facebook, Instagram, WhattsAp, Reels, etc.), who ultimately serve the company as a base for monetizing the business. In Q3, we saw very dynamic earnings growth. The stated both the larger CAPEX (good for companies - AI infrastructure providers like Arista Networks) and the 'aggressiveness' with which the company is burning through money in the 'Metaverse' (VR) business suggest that it sees no short-term risks to the business and expects continued positive growth.

Source: xStation5

Starbucks, Microstrategy, Robinhood earnings reports

Also, Starbucks (SBUX.US), MicroStrategy (MSTR.US) and Robinhood (HOOD.US) reported earnings reports today. 

• Starbucks loses 1% after disappointing on both the EPS ($0.80 vs. $1.03 forecast) and revenue ($9.07 billion vs. $9.3 billion forecast) sides. Moreover, the company's comparable sales fell 9% y/y, weighed down by a 14% y/y decline in China. In North America, sales fell 6% y/y. However, weak report was anticipated on Wall Street and didn't surprise investors
• Microstrategy shares lose almost 8% after reporting -$1.72 EPS vs -$0.14 exp. and revenue $116.07M vs $121M exp. Also, Robinhood reported $0.17 EPS  vs $0.18 exp. and revenue at $637M vs $658 exp. on Wall Street; shares are down 10% in after-hours. 

Source: xStation5