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- 🗞️ Microsoft Stuns Wall Street
🗞️ Microsoft Stuns Wall Street
MSFT, META, and Ford
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Market Performance
S&P 500: 6,262.90 (-0.12%)
Nasdaq: 21,129.67 (+0.15%)
Dow Jones: 44,461.28 (-0.38%)
Microsoft Joins the $4 Trillion Club
Microsoft (MSFT) stock is up 8% in pre-market trading after crushing earnings expectations, officially joining Nvidia in the exclusive $4 trillion market cap club.
The tech giant reported earnings of $3.65 per share versus the $3.37 expected, while revenue hit $76.44 billion against estimates of $73.81 billion.
The real story here isn't just the beat. It's Microsoft's AI infrastructure spending spree.
The company plans over $30 billion in capital expenditures for the fiscal first quarter alone, suggesting annual growth above 50%.
For context, that would put yearly spending over $120 billion, a 36% jump from analysts' $100.50 billion consensus.
Azure revenue exceeded $75 billion for the full fiscal year, growing 34%, while quarterly Azure growth hit 39% versus 34.4% expected.
Microsoft's AI bet is clearly paying off, with 100 million monthly active users across its Copilot products.
Our Takeaway
Microsoft's massive infrastructure spending signals confidence in sustained AI demand, but it also raises questions about near-term margin pressure.
The company's willingness to invest aggressively while competitors scale back suggests they see a competitive advantage worth paying for.
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Market Overview
The S&P 500 surrendered early gains on Wednesday after Fed Chair Jerome Powell threw cold water on September rate cut hopes.
Markets initially rallied on stronger-than-expected GDP growth of 3% versus 2.3% estimates, but Powell's hawkish tone about tariff impacts on inflation sent indices lower.
The Fed held rates steady as expected, but two officials, Christopher Waller and Michelle Bowman, dissented, pushing for a quarter-point cut.
This marked the first time since 1993 that a Fed decision saw such dissent. Powell emphasized the central bank's obligation to "keep longer-term inflation expectations well anchored" while assessing tariff effects.
Treasury yields jumped as investors repriced rate cut expectations. The 30-year yield hit levels not seen since 2023, climbing as high as 5.161% before retreating.
Trump's Friday tariff deadline remains firm, with the president stating it "will not be extended" and announcing India will face 25% tariffs plus penalties for buying Russian weapons.
Stock Moves Deciphered
Peloton (PTON) – The exercise equipment maker surged 18.8% after UBS upgraded shares to buy from neutral, signaling the stock could nearly double from current levels.
Novo Nordisk (NVO) – The Danish pharmaceutical giant extended losses, sliding 4% after cutting full-year guidance citing weaker Wegovy sales expectations and announcing new CEO amid competition.
Spotify (SPOT) – The music streaming service gained almost 5% after it fell 11% a day earlier due to an earnings miss. However, Deutsche Bank sees a buying opportunity ahead of potential price increases before year-end.
Headlines You Can't Miss
Starbucks jumped 4% after Q3 revenue of $9.5 billion beat estimates of $9.31 billion, with CEO saying turnaround is ahead of schedule.
PayPal is down 8% week-to-date despite Mizuho maintaining an outperform rating and $84 price target after earnings selloff.
Adidas fell 7% after warning Trump tariffs could add 200 million euros in costs during second half of year.
PNC Financial was upgraded to outperform by Oppenheimer with $238 target, citing well-managed regional banking quality.
Trump announces trade deal with South Korea setting tariffs at 15%, lower than threatened 25% rate ahead of Friday deadline.
Trending Stocks
Meta Platforms (META) – Shares jumped 11% in extended trading after issuing upbeat Q3 guidance of $47.5-50.5 billion revenue versus $46.16 billion expected.
The Facebook parent's strong outlook and AI investments continue driving investor confidence in the company's transformation.
CEO Quote🎤: “Over the last few months, we’ve begun to see glimpses of our AI systems improving themselves, and the improvement is slow for now, but undeniable. Developing super intelligence, which we define as AI that surpasses human intelligence in every way we think, is now in sight.”
Ford Motor (F)– Shares fell 3% after-hours as the automaker warned of a $2 billion net tariff-related headwind for 2025 earnings, reflecting $3 billion gross adverse impact offset by $1 billion in recovery actions.
The guidance highlights how trade policies are pressuring traditional automakers.
CEO Quote🎤: “We make about 80% of our vehicles [in the U.S.], but we still import parts from all over the world, and that’s the opportunity to work with the administration. And they are very committed to supporting companies like Ford that have committed to the U.S. manufacturing base.”
Visa (V) – Shares fell 3% in extended trading despite beating Q3 expectations with adjusted earnings of $2.98 per share versus $2.85 expected on revenue of $10.17 billion.
The financial technology company reaffirmed full-year guidance of low double-digit net revenue growth.
CEO Quote🎤: “Consumer spending remains resilient, with continued strength in discretionary and non-discretionary growth in the U.S.”
What’s Next?
Key Earnings Today 👇
Apple (AAPL): Fiscal Q3 revenue forecast at $89.16 billion vs. $85.78 billion last year. Adjusted earnings are expected to grow from $1.40 per share to $1.43 per share.
Amazon (AMZN): Q2 revenue forecast at $162.11 billion vs. $148 billion last year. Adjusted earnings are expected to grow from $1.26 per share to $1.33 per share.
Mastercard (MA): Q2 revenue forecast at $7.98 billion vs. $6.96 billion last year. Adjusted earnings are expected to grow from $3.59 per share to $4.02 per share.
Other Key News
June PCE price index (Fed's preferred inflation gauge) due Thursday.
Economists expect 2.5% headline PCE year-over-year, 0.3% month-over-month.
Weekly jobless claims data is also scheduled for release.
Track upcoming news and earnings on your portfolio companies with Ziggma.
Chart of the Day
Source: APP Economy Insights
Meme of the Day
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