Bloomberg Tech
Instant Reaction Earnings Roundup: Microsoft, Meta & Tesla Deliver Results
28 Jan 2026
Chapter 1: What are the latest earnings results for Microsoft, Meta, and Tesla?
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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. 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.
Chapter 2: How did Microsoft's spending and cloud sales impact its stock?
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.
Chapter 3: 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? 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.
Chapter 4: How is Tesla's investment in xAI shaping its future?
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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Chapter 5: What insights does Anurag Rana provide on Microsoft’s AI investments?
just because they have the capital to do it, they have massive market shares, and they have also the distribution. So these three, I think, will remain the way it is. The rest of the industry will shift around. We still think software has a place in this world, and there will be some damage, but it's not going to get completely blown up. And then let's see how that shapes up.
What's the damage that we'll see in your view? What's your prediction?
So if you are just selling a tool out there in the public to an enterprise or a small business, you may not get the same kind of premium that you were before. Remember, software business with 80, 90 percent gross margin business. But if you can spin some of that code up, you know, using white coding or internally, you may not need some of those tools out there. Now, we think.
At least on the enterprise side, having a core system of record, something like the one that's sold by SAP or a Workday, they're far more important and people are not going to rip them apart and use white coding tools internally out there. But if you are a visualization software or some kind of connector in between, you may not need to have that software.
So there is a lot that's going to happen over the next three to five years.
You know, interestingly, you know, looking at Microsoft Meta this year and last year, how the stocks have done, they've definitely underperformed some of the other MAG7 names and certainly some of the other large cap tech names.
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Chapter 6: What are the implications of Meta's advertising growth for its future?
But I'm just curious, you know, the concerns have been about the AI spend and whether it's going to pay off. Signs here from Microsoft, Anurag, that you're seeing that it does make sense. This spend that Microsoft is doing, the ROI is there.
Yeah.
Yeah, for Microsoft, it's definitely there. I mean, the only, I would say, the long-term hang-up is, you know, what happens when the open AI relationship breaks through? I mean, or goes away. That's the only big risk for Microsoft in the long run. They'll have to figure out their own LLM by then. But other than that, I mean, their cloud infrastructure product is pretty good.
And, you know, it's gaining market share. And according to our calculations, it will overtake Amazon in the next, you know, let's say three odd years or so.
On a rock, do they really have to figure out their own LLM? I mean, how much of open AI do they own?
But it doesn't matter if they own or not because they have the IP rights only till I think it's 2032, one of those years.
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Chapter 7: How does the competition in AI affect Tesla's market strategy?
And after that, they can't use those models after that. So remember that part of it as well. The financial part will stay, but it's the actual engine that is driving Copilot that's driving GitHub Copilot or the Microsoft 365 Copilot that you talk about. That's the intelligence that goes into that model.
How do you do that? How do you do that from just a resources perspective if you have spent so many billions of dollars supporting OpenAI and ChatGPT?
Well, they have their own models that are going on. It's just not as good as whether it's OpenAI or Cloud at this point, but they are putting a lot of effort behind it and most of all leads that. And that's where we need to see what kind of ROI do we see there? And do they actually get their act together over the next few years?
All right. I want to go over to IBM, which actually outperformed Microsoft last year. It was up about 35%. And we are seeing this stock up about 8.4% following its earnings release here.
Chapter 8: What predictions can be made about the future of these tech giants?
They post revenue that topped estimates. They talked about Software gains, specifically its software unit revenue up 12% to $19.7 billion in the fourth quarter. Software business jumping 14% to just over $9 billion. And the company projecting that revenue will grow more than 5% this year. And the company's CEO saying, quote, we enter 2026 with momentum and in a position of strength.
I don't know if you've had a chance to look at IBM, Anurag. Walk us through what we're seeing with this company.
Yeah, I was a bit surprised, actually, the 9% number on the software side. It is a bit shocking. I mean, for them to be, you know, total growth rate of 9% and software in double digits. I mean, we were not expecting that. So there's a lot to peel in that particular one and go back and see, you know, which segments outperformed.
Now, there's a tiny bit of M&A there, but even without that, I mean, I think this is very good. And the big number for us is that the cash flow is going to go up by a billion dollars next year. So I think IBM's turned them around very well. I think the strategy is executing well, and Arvind's done a good job in this case.
The acquisitions, Red Hat, HashiCorp, Confluent, that's a big part of the spend. Is that like looking to sort of what Salesforce has done in recent years, growing through these acquisitions?
I think there's nothing wrong in going through acquisitions if you don't pay enough for them, if you pay the right amount. And in this case for IBM, every two years they'd go out and buy something that would help their gross margins, that would help their adjusted EBITDA, that would help their free cash flow, and they use that cash flow to buy more.
But they're already concentrated in certain areas such as hybrid cloud or the ability to make sure that the internal infrastructure of a company or the enterprises is something that they have a good handle on. And I think they're executing it very well.
Listen, their bookings for their AI business at IBM exceeded $12.5 billion since mid-2023. That's an increase from the $9.5 billion disclosed during its prior earnings report. A bit more than 80% of the bookings come from the consulting unit with the rest in software, according to the CFO in an interview.
Their AI exposure, I mean, this is something that has been, I think, helping the struggling, long struggling consulting division. So are we seeing improvement?
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