Yahoo Finance

Meta and Microsoft capping an eventful day of earnings and here with the takeaways is Yahoo! Finance's tech editor, Dan Howley. Dan.

That's right. Let's start things off with with meta. They, uh, kind of had the the more interesting of the two stories. They beat on both the top and bottom line, but more importantly, they offered better guidance than initially anticipated. They say that Q2 revenue will come in between 42.5 billion, 45.5 billion. Uh, the street was looking for 44 billion. And so this kind of assuages some of the concerns for now that there's any kind of advertising slowdown coming as a result of the tariff uncertainty and broader economic uncertainty. Again, they beat for the quarter. They had EPS of $6.43. Uh, expectations were for $5.25. And revenue came in at 42.3 billion versus 41.3 billion anticipated in. Uh, but just want to point out, they also raised their full year capex estimates. They went from 60 billion between 60 and 65 billion to 64 billion to 72 billion. So a big jump there, and that's obviously related to all the the AI spending that they're going into. By the by, meta reality labs segment had an operating loss of 4.21 billion dollars for the quarter. So, obviously, not doing the best there. But let's switch over to Microsoft. They also beat on the top and bottom line. Uh, they saw cloud revenue of 42.4 billion. That was up 20%. Uh, one of the important things to point out here is that AI contributed 16 points of growth, growth to Azure revenue. Now, Wall Street was expecting 15.6 points. Uh, and basically, Microsoft was saying that that's a result of getting more capacity online. They've been repeatedly saying that their capacity constraint is causing headwinds, uh, it's why their AI isn't growing as fast as they would like, but now they're starting to get that online, and they're starting to be able to meet the demand that's already there that they haven't been able to meet before. Uh, one of the other things I want to just quickly point out, uh, is on the personal computing side, and that's their the PC business. They saw revenue of 13.4 billion. Wall Street thought it would come in at 12.6 billion. And part of the reason is that Windows OEM partners, uh, they brought in more sales, uh, into the the current quarter, just as kind of building up the the inventory because they said the inventory already was elevated and it remains so. So it's an idea of that pull forward of, of PC sales or PC shipments just trying to get ahead of any kind of tariff uncertainty in the prior quarter.

We earlier talked to Brent Phil of Jefferies, and he said something that kind of stuck with me, which he said, these are two desert island companies. In other words, if you're a chief information officer at a company or if you're an advertiser, the last thing that you will cut is your check you write to Microsoft, where the money you send to Microsoft every month, and that, and if you're an advertiser, what you spend on meta. So that even if you do get sort of economic deterioration because of the tariffs or for whatever other reason, maybe they'll cut spending these companies eventually, but that it would be sort of a last stand, or last straw, or last resort that they would take.

Yeah, I mean, look, Microsoft, you obviously need to be in the cloud to to play with anything when it comes to the enterprise now. And then when it comes to advertising, it's it's meta, Facebook, whatever you want to call it, and Google. And you know, we did see declines, obviously, during COVID, uh, but that was super extreme time. So, uh, that's all back now. Um, and yeah, I mean, it does appear that they're, they're weathering whatever kind of storm is coming or isn't coming, or, you know, nothing.

And then tomorrow, Amazon and Apple. We can do it all again.

Yeah, and then I'll just take a nap for a month. Yeah.

Thank you, Dan. Appreciate it.