Instant Reaction Earnings Roundup: Microsoft, Meta & Tesla Deliver Results
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What were the initial reactions to Microsoft's earnings report?
Bloomberg audio studios, podcasts, radio news. This is a breaking news update from Bloomberg instant reaction and analysis from our 3000 journalists and analysts around the world.
Carol Masser, along with Tim Stenevik, live in our Bloomberg Interactive Broker Studio. As we mentioned, those big three of the mag seven reporting. Right now, Meta is up about four and a quarter percent. Microsoft down about five percent off its aftermarket lows. Tesla has also bounced back.
I want to bring in Bloomberg Intelligence Senior Technology Analyst Anurag Rana. He joins us in Bloomberg's Chicago bureau. Microsoft down 5% right now.
How did Microsoft's spending impact investor confidence?
Taking a look at some of the headlines, Anurag, that crossed. I know you've only had a few minutes to actually look at these. Second quarter, Azure, another cloud revenue. XFX was up 38%, meeting estimates. Second quarter, revenue for the company beat estimates at $81.27 billion. Second quarter, intelligent cloud revenue, beat estimates. We also saw Microsoft 365 commercial seats grew 6%. 45% of commercial RPO was driven by open AI commitments, commercial remaining performance obligation, $625 billion. What's not to love here? Is it all about CapEx?
No, I think it's usually high expectations and the fact that they only met Azure growth rates, which was 38%. I think that's probably weighing on the stock because one would have expected them to blow out that number. It has been around 39% the last couple of quarters. So I think that's where a little disappointment could be. But that could also be because of supply constraints. That's something we have highlighted in our research before. But, you know, if you look at some of the other numbers, such as RPO, you mentioned above 600 billion, that's very impressive. And we already know the capex was going to go up. So I think in tandem, that's the only number that sticks out that they didn't beat by a decent amount.
All right.
What factors contributed to Meta's strong quarterly performance?
So then, I don't know, what do we want to dig into a little bit more deeper? It says Microsoft's quarter includes net gains from investments in OpenAI. Are we going to get a little bit more of a picture about that and what's going on there?
I think the question I have is, you know, there's a big number that, you know, that 690, 600 plus billion RPO you mentioned. There is a large portion of that comes from OpenAI. So the big question is, you know, how is OpenAI going to fund this thing? Do they have the capital to actually fund, let's say, a 200 plus billion dollar commitment? But other than that, what are other clients spending that are not open AI? And, you know, how is that business going? And if that wasn't the case, how should we look at Azure growth in the coming quarters?
How is Meta leveraging AI for future growth?
I think those are the big questions that we need answered right now.
I don't remember where I saw this. I don't remember if it was on our program yesterday. I think my brain is mush. I'm sorry, Anurag.
What was it?
It was all about Claude from Anthropic competing with Copilot and Claude offering products and services at a fraction of the cost or even free versus what companies are paying for when it comes to Microsoft Copilot. How big of a threat is that?
Oh, actually, I mean, to be very honest, right now, the entire software sector has been absolute under threat because of a lot of what you are mentioning, whether it's cloud or whether it's open AI tools or whether it's open source. I mean, look at the valuations of software companies. They've been completely destroyed over the last six to nine months. And a large portion of that is driven by what you just said.
So interesting.
Well, you know, yeah. I mean, so is it in flux still, safe to say, Anurag, in terms of who ultimately are going to be the leaders when it comes to this AI world? Or will there be multiple big players?
Yeah.
So we are absolutely in flux right now as to who will own the final product. And that's partially the reason when you have these valuations go all over the place. But I would comfortably say when it comes to somebody like a Microsoft's cloud portfolio or Amazon's cloud portfolio or Google's cloud revenue, I think these three companies will dictate a large portion of that market share
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Chapters
8 chapters
1
What were the initial reactions to Microsoft's earnings report?
0:02–0:46
2
How did Microsoft's spending impact investor confidence?
0:46–2:02
3
What factors contributed to Meta's strong quarterly performance?
2:02–2:44
4
How is Meta leveraging AI for future growth?
2:44–4:16
5
What is Tesla's investment strategy regarding xAI?
4:16–5:53
6
How are Tesla's earnings affecting its stock performance?
5:53–7:08
7
What insights did analysts provide about the tech sector's future?
7:08–8:22
8
What are the implications of AI investments for these companies?
8:22–33:07
Speakers
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