Bloomberg Businessweek - "Meta, Microsoft and Alphabet All Report Earnings"

Date: October 29, 2025
Hosts: Carol Massar & Tim Stenovec
Guests: Anurag Rana (Bloomberg Intelligence), Ivan Feinseth (Tigris Financial Partners), Brooke May (May Wealth), Kurt Wagner (Bloomberg News)

Episode Overview

This episode dives into the latest earnings reports from three tech giants—Meta, Microsoft, and Alphabet ("Three of the Mag 7"). The hosts and a panel of experts analyze quarterly results, the ongoing AI investment boom, market reactions, and the business strategies driving these companies' futures. Particular focus is given to Meta's surprise tax charge, capital expenditures across the board, and the high-stakes competition in cloud computing and artificial intelligence.

Key Topics & Discussion Points

1. Microsoft Earnings & Cloud Race

(02:10 - 05:45)

• Azure Growth: Microsoft posted a 39% increase in its Azure cloud business revenue, surpassing the 37% street estimate ([03:47]).
  • Anurag Rana: "Given that size, that's pretty good. The margins actually stood out way higher than what we were anticipating." ([02:10])
• CapEx Surprise: Microsoft reported capital expenditures “substantially higher than the $30 billion they talked about.” ([02:10])
  • Rana: "They have so much demand coming in, they're going to add more capacity this year... we've been saying for a while."
• Cloud Outages & Competition: AWS outage impact was discussed, but large enterprises are unlikely to switch cloud providers quickly.
  • Rana: "[The] big opportunity... is most companies eventually will have a backup cloud provider... that's going to be one of the bigger growth drivers down the road." ([03:11])
• OpenAI Relationship: Discussion centered on Microsoft's strategic advantage not just from its equity in OpenAI, but the tech it “holds onto.”
  • Rana: “They will sell more products, they will sell more cloud services using that technology than they would just on the share side of it.” ([05:20])

2. Meta’s Earnings: The Tax Hit & AI Spending

(05:45 - 15:14)

• Massive One-Time Tax Charge: Meta took a $15.93 billion non-cash deferred tax charge due to the 2022 Inflation Reduction Act’s alternative minimum tax ([06:42], [07:20]).
  • Ivan Feinseth: “It actually goes down significantly going forward. I think this is really a non event. It's an accounting issue and I think any weakness is a buying opportunity…” ([07:20])
• AI Investment Theme: Meta, Microsoft, and Alphabet are all boosting capital investment in AI, a trend seen as positive by guests.
  • Feinseth: “We've seen all three companies reporting today, Alphabet, Microsoft and Meta, all increasing capital investment in AI development. And that's positive… for the bullish AI investment theme.” ([07:57])
• Investor Worries: Investors appear spooked by rising CapEx, with Meta shares dropping as much as 9% after hours ([15:14], [16:53]).
• Reality Labs Losses: Meta’s Reality Labs (AR/VR, smart glasses) posted $4.4B in losses for the quarter, but is described as a long-term play.
  • Feinseth: “This is going to be what the cell phone was in the mid-90s.” ([15:52])

3. Alphabet’s Surprise Beat & Cloud Strength

(15:09 - 18:49)

• Stock Surge: Alphabet’s shares jumped 6% after hours, attributed to strong cloud contract wins and revenue growth ([15:14], [17:14]).
• CapEx Guidance: Alphabet forecasts $91-93B in capital expenditures for the fiscal year, up from ~$85B prior ([18:12]).
  • Max Chavkin/Hosts: “You got to spend money to make money, Carol.” ([18:20])
• AI Product Reach: Gemini app hits 650 million MAUs ([18:30])
• Consensus: Alphabet now seen as a front-runner alongside Nvidia in AI-driven growth.

4. The Bigger Picture: AI Spending, Market Timing, and Leadership

(24:15 - 27:12)

• AI Spend is the Theme: Consensus among panelists that companies able to monetize AI investment will win.
  • Brooke May: "Those who can are going to be rewarded... not only is it earnings growth but it's what are they spending to improve the business. How are they investing in AI and then how are they going to monetize it?" ([24:15])
• Short-Term vs Long-Term Views: Market and investors focused on quarterly numbers, while tech giants are planning for years ahead.
• Valuation Concerns: Microsoft’s high forward P/E relative to growth rate is questioned.
  • May: "We need a catalyst and I don't necessarily see the catalyst in the near term for Microsoft to move meaningfully higher." ([31:03])

5. Meta’s Smart Glasses & The Next Platform Bet

(32:04 - 34:58)

• Meta’s Bet: Mark Zuckerberg believes smart glasses (e.g., Ray-Ban Meta) could replace phones as the dominant platform.
  • Kurt Wagner: “I'm going to go ahead and say yes... it makes sense to me that the phone would evolve into something else at some point. I do understand why they think glasses could be that thing. It's something people already wear. It's hands free, which I think is a huge perk.” ([32:42])
• Competition and Challenges: Meta currently leads in consumer smart glasses, but pressure from Apple, Google, and others is mounting.
• Host Banter: “No rose-colored glasses though right now because Meta share is now down near their lows in the aftermarket, down about 9%.” ([16:53])

Notable Quotes & Memorable Moments

• On Margin vs Revenue Growth:
  Ivan Feinseth (14:19):
  “There are times where your gross margin can contract, but your economic margin can increase… That is the most powerful driver of shareholder value creation.”

• On AI's Potential:
  Feinseth (13:14):
  “We are in the first inning of the world series of AI driven economic, global economic growth. And this trend is going to continue and it's going to be powerful and it's going to be game changing. And I think that AI is going to enhance and create many more jobs than it will eliminate.”

• On Meta’s Vision for Smart Glasses:
  Feinseth (15:52):
  “This is going to be what the cell phone was in the mid-90s.”

  Wagner (32:42):
  “It makes sense to me that the phone would evolve into something else at some point... hands free, which I think is a huge perk.”

Important Timestamps

| Time | Topic | |---------|------------| | 02:10 | Microsoft earnings, Azure growth, CapEx | | 03:11 | Cloud market dynamics, backup cloud provider trend | | 05:20 | Microsoft’s partnership & technology access with OpenAI | | 06:42 | Meta’s one-time $16B tax charge explained | | 09:10 | Alternative minimum tax (from Inflation Reduction Act) | | 11:16 | Microsoft’s position in AI and cloud, future outlook | | 15:09 | Alphabet’s earnings beat, post-market surge | | 15:52 | Meta’s Reality Labs: future of smart glasses | | 18:30 | Google Gemini surpasses 650M MAUs | | 24:15 | Brooke May on AI investing and who’s winning in MAG7 | | 27:40 | Kurt Wagner on Meta’s results and investor reaction | | 32:04 | Meta’s glasses, Mark Zuckerberg's vision for the next computing platform | | 34:10 | Key question for Zuckerberg: will Meta make more investments in AI companies? |

Takeaways for Listeners

• The race among tech giants to capitalize on AI and cloud is intensifying—with all three companies elevating Capital Expenditures to historic levels.
• Cloud growth remains rapid (Azure +39%, Alphabet strong), but stock reactions depend on the perceived sustainability and monetization of AI investments.
• Meta’s big tax charge is an accounting event, but the market is more worried about rising AI and hardware (Reality Labs) spending.
• Smart glasses are viewed as a potential “next big thing,” though mainstream adoption hurdles remain.
• Alphabet currently looks the strongest among the three, both in earnings and investor sentiment.

Episode Summarized by Bloomberg Businessweek Podcast Summarizer