30 January 2025
If you are covering Meta or Microsoft's latest results, please see the following comment from Ben Barringer, technology analyst at Quilter Cheviot:
Meta:
“Meta’s results came in better than expected which has seen the stock rise 5%, driven heavily by revenues which were up 21% and profits up 42%. The company has also guided to 11-18% growth, meaning all of its headline figures came in ahead of consensus.
“Meta’s guide for 2025 operational expenditure is the only slight blemish, coming in slightly higher than had been hoped. Meta capital expenditure will also be higher at $60bn-$65bn, driven by AI data centre investments, though this had been expected. Meta’s decision to pay $25m to settle President Trump’s lawsuit over his 2021 ban has also made headlines, but the company will not admit wrongdoing.
“Llama 4, Meta’s upcoming AI model, is expected to have much of the functionality that DeepSeek has recently broken through with. While Meta anticipates less training for this model, it expects a higher degree of inference and chain of thought progression.
“Meta also continues to push ahead with its Metaverse and its collaboration with Ray-Ban. The stock market has been less than pleased by this in the past, but CEO Mark Zuckerberg remains committed. Meta AI within its Messenger platform was also highlighted, with user numbers expected to climb to 1bn, resulting in a total of 3.3bn users across the Meta family of apps.
“Overall, Meta continues to be a strong outperformer against peers such as Google, and we retain conviction in the company.”
Microsoft:
“Microsoft posted a somewhat disappointing set of results, resulting in a 4% fall in its share price after hours.
“Microsoft’s revenues were in line with consensus at 12% and bookings were strong, up 34%. Geographically, Microsoft has made improvements compared to the weakness in Europe seen in the previous quarter.
“Copilot was also a positive within the company’s numbers, but its Azure cloud business saw slower growth than had been hoped and was the reason for the stock’s fall. Microsoft had previously guided between 31-32%, and Azure came in at 31%. While this may only be a percentage point miss, expectations for a beat are always high for Microsoft so this has been rather poorly received. Microsoft also acknowledged DeepSeek’s success but seems relatively unphased given its view that it continues to see advances in both hardware and in software.
“While these results are a little disappointing, there is nothing to panic about with Microsoft. It remains a core, diversified way of playing growth in technology and AI given its strong position and recent valuations.”
