Tech Giants Show Resilience:

Microsoft and Meta Beat Earnings Expectations

In a challenging market environment marked by economic uncertainties and tariff concerns, tech giants Microsoft and Meta have delivered stronger-than-expected quarterly results, offering investors a glimmer of hope amidst broader market volatility.

Microsoft Shines on Cloud Strength

Microsoft shares jumped about 9% in extended trading after reporting impressive fiscal third-quarter results. The company posted earnings of $3.46 per share on revenue of $70.07 billion, handily beating analyst expectations of $3.22 EPS and $68.42 billion in revenue.

The company's Azure cloud service was the standout performer, with revenue growing 33% year-over-year, significantly outpacing analyst estimates. AI-related services contributed 16 percentage points to this growth, highlighting Microsoft's successful AI integration strategy.

Looking ahead, Microsoft provided strong guidance with projected revenue between $73.15 billion and $74.25 billion for the next quarter, exceeding analyst expectations. The company expects Azure growth to continue at 34-35% at constant currency, demonstrating confidence despite macroeconomic headwinds.

Microsoft continues its aggressive investment in AI infrastructure, with capital expenditures reaching nearly $16.75 billion in the quarter, a 53% increase year-over-year. CEO Satya Nadella had previously announced plans to spend $80 billion in fiscal 2025 on data centers for AI workloads.

Meta Delivers Strong Results Despite Challenges

Meta also impressed investors, with shares rising up to 5% after reporting first-quarter earnings of $6.43 per share on revenue of $42.31 billion, both exceeding analyst expectations. Net income jumped 35% year-over-year to $16.64 billion.

The company issued guidance for second-quarter revenue between $42.5 billion and $45.5 billion, in line with analyst expectations. However, Meta noted seeing reduced ad spending from Asia e-commerce exporters, potentially signaling headwinds for the digital advertising market.

Meta adjusted its 2025 outlook, lowering total expense projections to $113-118 billion while increasing capital expenditure forecasts to $64-72 billion to support AI initiatives. The company cited rising infrastructure hardware costs, partially due to global trade uncertainties.

CEO Mark Zuckerberg highlighted growth in Meta's key products, noting that Threads has reached 350 million monthly users, up from 320 million in January. Additionally, Meta AI now boasts nearly 1 billion monthly users, with WhatsApp serving as the primary access point.

Market Context

These results come amid a challenging market environment. The U.S. stock market has experienced its worst first 100 days of a presidential term since 1974, with technology stocks particularly affected by tariff uncertainties and economic slowdown concerns.

President Trump's tariffs, including a 145% tariff on China, have created volatility for tech companies with Asian supply chains or advertising revenue exposure to affected markets.

The upcoming jobs report on May 2 could further influence market sentiment, with potential implications for Federal Reserve policy.

Despite these challenges, the strong performance from both Microsoft and Meta suggests that leading tech companies with solid AI strategies may be better positioned to navigate the current economic landscape than previously feared.

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