Redmond, Washington — Two of the United States’ major trillion-dollar companies, Meta and Microsoft, unveiled their earnings on Wednesday, marking a pivotal moment for investors amid growing concerns over tariffs that could influence the appetite for growth linked to artificial intelligence.
Microsoft reported record earnings, achieving $70.1 billion in revenue and an earnings per share of $3.46, which translates to a net income of $25.8 billion. These figures surpassed analysts’ expectations of $68.4 billion in revenue and $3.22 earnings per share. The company’s performance represents a 13% increase in sales year-over-year alongside an 18% rise in profits, making it the most successful quarter in Microsoft’s history. Following the announcement, shares soared approximately 6%, trading at around $420 in after-hours markets.
Meta, the parent company of Facebook, also outperformed analysts’ projections. The company reported $42.3 billion in revenue and earnings per share of $6.43, exceeding forecasts of $41.4 billion in revenue and $5.23 in earnings per share. Looking ahead, Meta anticipates second-quarter revenue between $42.5 billion and $45.5 billion, significantly higher than the consensus estimate of $41.3 billion. In after-hours trading, Meta’s stock rose by about 5%, reaching over $570.
These tech giants are part of the “magnificent seven,” a group that includes Google parent Alphabet, Amazon, Apple, Nvidia, and Tesla. This collective represents approximately one-third of the total market capitalization of the S&P 500, largely due to their substantial influence in the booming AI sector. Microsoft benefits from its Azure cloud computing platform and its partnership with OpenAI, the creator of ChatGPT, while Meta recently introduced its own AI application aimed at competing with generative AI technologies.
Despite their impressive earnings, both companies have seen their stocks decline by about 5% this year, reflecting broader trends in the stock market and a decline in investors’ risk appetite. The performance of these companies stands in contrast to other tech firms, such as Amazon and Apple, which have experienced more significant losses due to their greater exposure to the uncertain Chinese market.
Analysts see this week as a critical juncture for technology stocks. Dan Ives from Wedbush highlighted that the ongoing trade tensions represent a significant variable for these companies, indicating that the upcoming earnings reports will provide valuable insights into consumer and business demand during these economically turbulent times.
Looking forward, the earnings announcements continue with Amazon and Apple set to release their quarterly results on Thursday. These high-profile reports will further factor into the assessment of the market’s resilience in the face of potential economic challenges and shifting global trade dynamics.