Meta, Microsoft and Alphabet All Report Earnings

Summary

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)

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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.

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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])

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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.”

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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? |

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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.

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Episode Summarized by Bloomberg Businessweek Podcast Summarizer

Transcript

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[Stacey Vanek Smith]

Let's head out to our Chicago News bureau. That's where we find Bloomberg Intelligence Senior Technology Analyst Anuragrana Anurag. We want to give you a little time to stew over this. Walk us through what we've got so far from Microsoft because investors seem a little disappointed.

[Anurag Rana]

I mean I don't, I don't really find a whole lot of mistakes. And there's these numbers and you look at azure growth of 39%. I mean given that size, that's pretty good. The margins actually stood out way higher than what we were anticipating. We thought there was going to be pressure on margins because of all the spending. And then the lastly when you look at the CapEx number, substantially higher than the 30 billion that they talked about. Now in you know, to some people maybe that's a disappointment, but for us that's a good thing because I think they have so much demand coming in, they're going to add more capacity this year. This year. And that's something that, you know, we have been saying for a while.

[Max Chavkin]

You know, I'll ask you the same question that I asked Angelo Zeno a little earlier. Maybe it's too early to tell, maybe we won't hear anything about on the Call. But the cloud race between the three biggest providers out there, aws, Azure, Google Cloud. Is there an opportunity for Azure to get market share from companies that might have been affected by last week's AWS outage? Is that an opportunity?

[Anurag Rana]

Well, typically I would say no because they are facing the same problem today, frankly. So when you look at some of these large install bases, it's very difficult to change your applications. But what is the big opportunity, not just for Amazon or not just for Microsoft, but for all of them, including Oracle, is most companies eventually will have a backup cloud provider. They don't have it right now, but that is going to be one of the bigger growth drivers down the road after the boom is done, you know. So, I mean, from our side, the market is big enough for all of them to prosper very, very well in the coming years.

[Stacey Vanek Smith]

I mean, as you said, the Azure cloud computing unit posted a 39% revenue gain in the quarter when adjusting for currency fluctuation. That did beat the street estimate of 37%. I'm reading some, you know, analysis that says, well, that was a. Disappointed. The, the expectations were high. What, what was there a whisper number in terms of growth on the street?

[Anurag Rana]

No, the consensus was 37. This is what the company said. Now that is if you really want to dissect it, you know, badly, then you could say, well, Google Cloud growth accelerated in the quarter compared to the previous quarter. But Microsoft, it was 39. It's, it's still at 39. But you know, they are different bas. Once you know, Microsoft is running at about 75 to 80 billion dollars in annual run rate. You know, Google Cloud is still at 30% and yet Azure growth is higher than Google's cloud growth. So, you know, I think people are probably just splitting hairs at this point.

[Max Chavkin]

Yeah, and you referenced that when you were answering my question. You referenced the outage that Microsoft has having right now, this global Microsoft outage. So we should note that. Yeah, just cloud. Cloud companies are cloud companies and sometimes it's AWS that has the outage, sometimes it's Microsoft that, that has the, that has the outage. Hey, the open air question, we talked a lot about this with you yesterday. And I imagine that on the call investors will have a lot of questions about, okay, this close to 30% ownership of OpenAI, the parent company of Chat GPT. What is that going to do for Microsoft?

[Anurag Rana]

See, I think from our side the equity part is not what, you know, for our concern. It's really the technology that Microsoft is holding on to that's really the critical piece. Because you know, one of the ways we think about is they will sell more products, they will sell more cloud services using that technology than they would just on the, you know, share side of it. And that's a bigger thing for us because they have, you know, a hold of that for the next seven years.

[Stacey Vanek Smith]

Hey, one of the things I want to ask you, and I know this isn't typically your coverage but you know, you're smart and you cover all things technology, but Metta, Metta down almost a percent here in the aftermarket as you see this. What's, what's the, this one tax, one time tax charge? I guess we're still trying to figure this out but is it all about that or is it just that we were caught off guard?

[Anurag Rana]

See, I think that could be a lot of the noise than the number and you know, I'm very sure they're going to give clarity on that. But the big question with overhand mega metal always is, you know, how are you monetizing? You're spending all this money. Where is the revenue you show for it? I think that's where management really needs to give and address that in a much more succinct way than they have. The other side is they don't have a cloud platform just like Google does or Amazon does or Microsoft does. So so matter is the one that needs to explain these things far better than frankly the other three I want to bring in.

[Max Chavkin]

Ivan Findseth, Research director and Chief Investment officer with Tigris Financial partners got over $500 million in assets under management and pose that same question to him about Meta Platforms. The company saying that the implementation of the One Big Beautiful Bill act led to the recognition of a valuation allowance against our US federal deferred tax assets reflecting the impact of the US corporate alternative minimum tax. The result of one time non cash income tax charge of $15.93 billion shares Carol down 7.8%. Ivan, you've had some time to dig into this a little bit on the Metta platform side. What's going on here?

[Ivan Feinseth]

Well, all right, so the Big Beautiful bill caused the recognition of a deferred tax asset. It's actually a non cash charge and they're well it caused a spike in their tax rate 87% for the quarter. 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 in the stock because there's so many positive long term trends that will continue to drive the stock higher.

[Max Chavkin]

But is that why the stock is down right now? Because of this one time charge of affecting the bottom line? Is that, is that the concern or is it what Carol brought up the idea of Capex going up next year the spend.

[Ivan Feinseth]

Well now we have seen investors make a mistake consistently in selling matter matter platforms. On capital investment increases. They continue to invest in driving their AI capabilities which drives increased user engagement. It drives increased return on ad spend investment. So I like when they continue to invest and we've seen this multiple times. If you listen to what Mark Zuckerberg does every time he invests from the beginning from changing the company from Facebook to Metta and when he was investing in mobile the stock sold off. Now most of the people engaging in Facebook and Instagram do it on their phone. So you have to listen to him. He says what he does and he does what he says and he continues to create value. So on any weakness over the increase in capex and again this is positive because there's been a fear that we're going to see this AI bubble burst, that companies are not going to continue to invest. 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 companies, those three companies and it's positive for the bullish AI investment theme.

[Stacey Vanek Smith]

You know this 15% corporate alternative minimum tax. Yeah, I'm googling some stuff here folks because I want to understand it. It came out of the INFL Inflation Reduction act of 2022 and it generally applies I think to corporations with an average annual adjusted financial statement income exceeding $1 billion over three consecutive years. Yeah, we're all going to be learning a little bit more about this. But Tim, you keep bringing up like why, why aren't we seeing this with maybe some of the other ones?

[Max Chavkin]

Yeah, why is Meta, why are we only talking about this with regard to Meta platforms?

[Ivan Feinseth]

They may be one of the ones that has the largest deferred tax asset and that has really to do with timing and expensing of things like R and D as an example.

[Stacey Vanek Smith]

So you know we're talking about a lot of things and Ivan, we want to get, you know, your view on some of the other companies that have reported. Anurag, we do want to ask you though, what are you thinking that you want to, you're going to be looking for on the call going back to Microsoft if you will, as we continue to see that one trading lower here in the aftermarket. Let me just pull it up on my Bloomberg because we have seen some pressure here. The stock continuing, it's down still about 3.4%. Is it? What do you want to hear from this company?

[Anurag Rana]

I think.

[Stacey Vanek Smith]

Let me, let me get an iron first. Forgive me, Ivan.

[Anurag Rana]

Okay, so the biggest thing for us is going to be, you know, what's the back half of Capex spending? The Capex in the first quarter was very high, 35 billion compared to 30 which they guided to. We want to know what is it going to be in the, the back half of the year. Are they going to slow down tremendous dramatically or is it going to keep pace at where we are right now?

[Stacey Vanek Smith]

All right, Anurag, we know you've got research to write. We're going to let you go and look forward to reading that. Ivan, we want to stay with you for a little bit. We are talking with Ivan Feinseth, research director and chief investment officer with Tigris Financial Partners. Anurag Rana, of course, our senior tech analyst here at Bloomberg Intelligence. Ivan, other companies that reported Meta obviously caught our attention. We just talked with Microsoft or talked about Microsoft with Anurag. What's your take on what we got from them? Because that Stock's down about 3% here in the aftermarket.

[Ivan Feinseth]

Well, right now we're in an environment of, you know, people have been buying these stocks ahead of results. They sell into the results. But I still say that this AI investment theme is powerful and the companies leading it are Metta, Google and Microsoft. And you got to buy on any weakness. I want to hear from Microsoft about increase AI driven application engagement and subscription increases, how users are buying and implementing and using Copilot. Of course you want to see growth in all key categories like cloud, Azure.

[Stacey Vanek Smith]

I mean azure was up 39%. That's pretty good, right?

[Ivan Feinseth]

Phenomenal. And that's their big growth engine and they have been announcing huge contracts. So has Google. Unfortunately Amazon had that outage with was. It was disappointing but didn't really set back the stock. But these are the growth drivers, the cloud hosted AI platforms.

[Max Chavkin]

Yeah, I was, I was surprised to see Amazon stock actually higher that day. I know, but I think it also speaks to the power of Amazon. And like you got in a good understanding of how much it has. Remember, the company is investigating outages. This is Microsoft is investigating outages of Office and game applications today also. So this kind of goes both ways. Ivan on Microsoft. One more and then we're going to get back to some more meta platforms, I think. But a small 1.2% beat on adjusted diluted eps on Microsoft. Remind you know, everybody, the company does not give guidance in this statement. It does that on the conference call. It's doing that on the conference call. Is it like worth even talking about it without even having it? Oftentimes we wait for the call to get more information, but in this case, like forward guidance coming from the call, it's kind of a moot point.

[Ivan Feinseth]

Well, the disconnect in the dichotomy that exists between companies and Wall street is that companies plan for one, three and five years and Wall street wants to measure everything on a quarterly basis. I mean, the guidance, it's somewhat important, but you wanted to see consistent growth driven by their investments in technology, the adoption and use of their technology that creates their competitive advantage. And those are the key things to look at. And 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.

[Stacey Vanek Smith]

Going back to the cost thing though, for Metta, you know, I'm just, you know that operating margin, 40% for the third quarter, down from 43% last year, is that worrisome or you think manageable?

[Ivan Feinseth]

Not really. I mean, we've looked at companies that have had huge growth trajectories while their margins were contracting. In fact, Amazon doesn't focus on margin, they focus on revenue growth. They don't focus on return on capital, actually, which is one of the key things we focus on. But they do drive a huge return. So, you know, there are times where your gross margin can contract, but your economic margin can increase. And that is the economic margin is the difference between return on capital and cost of capital. That is the most powerful driver of shareholder value creation. So it's not so much important about what happens with gross margin. It's in fact, I've seen many companies drive huge growth by lowering their growth margin because you're just becoming more competitive and they're actually making it up on return on capital.

[Max Chavkin]

Okay, we're going to talk About Alphabet with you in just a minute. Carol reminded me that shares are surging higher in the after hours.

[Stacey Vanek Smith]

6%.

[Max Chavkin]

6%. Okay, one, one more on matter platforms down 8.4% in the after hours Reality Labs losses for the third quarter, $4.4 billion. It's about the same as one year prior to. Obviously it's a huge investment area for meta Platforms. In the press release, Mark Zuckerberg specifically calling out the success of the eyewear and saying essentially I don't have it in front of me to be essentially said if we think the future is going to be what it is, this is going to be the most exciting moment for meta platforms ahead of us. These will be the most exciting years for meta platforms. What is the opportunity that meta platforms has when it comes to eyewear?

[Ivan Feinseth]

This is going to be a tremendous communication and interactive platform and it's only going to get better in a few years. We're going to look back on these original glasses, the ones that they've launched from Ray Ban, the recent ones from Oakley and the functionality in a few years from now is just going to be more and more incredible. But this ability to engage with real time information to share pictures and images and videos and in real time with other people that you're talking to. And while Mark Zuckerberg believes that the glasses are going to replace your, your smartphone, you're just going to keep your smartphone in your pocket and you're going to interact with data and information and people who you're communicating with with these glasses. And eventually we're going to see once that matter just launched, ones with displays. It's going to be all about having displays embedded in, in the lens so you don't even have to touch your phone. So this is going to be a huge growth. This is going to be what the cell phone was in the mid-90s.

[Stacey Vanek Smith]

No rose color, no rose colored glasses though right now because Met A Share is now down near their lows in the aftermarket, down about 9%.

[Max Chavkin]

I'm going to remember that Ivan said this is going to be what, what cell phones were in the 90s and by the way, he's not wearing any metal glasses right now.

[Stacey Vanek Smith]

Well, and I will say our Mark Gurman really, really likes them as well. Hey, we do have to ask you about Alphabet because we are seeing this one actually up about 6% here in the aftermarket. What do you like? What's, what's of note, do you think.

[Ivan Feinseth]

In their release, cloud growth, big cloud contract wins that they've had over the past few months with, with Mehta, with Open Air, with other companies this, you know, that matter. Amazon and Microsoft. I'm sorry, Alphabet. Amazon and Microsoft are building the AI and cloud infrastructure that everybody is connecting to and going to continue and increasingly coming are going to be connected cars as we move through to full autonomy. So we are going to need high speed, real time, constant connectivity to the cloud. And those are huge opportunities for the three major public cloud service providers, Alphabet, Google and Microsoft.

[Stacey Vanek Smith]

Well, and they're spending big. They're now seeing fiscal year CapEx 91 to 93 billion. They had seen about 84, $5 billion. So hey, you got to spend money.

[Max Chavkin]

To make money, Carol. You got to spend money to make money.

[Stacey Vanek Smith]

I mean, they say it's wild, right? Like the number. They also Gemini, their app now has over 650 monthly active users.

[Max Chavkin]

650 million.

[Stacey Vanek Smith]

650 million.

[Max Chavkin]

Okay.

[Stacey Vanek Smith]

Yeah. Didn't I say that it's a lot. How do we, how do we know that this AI thing, how do we know that all this spend is going to pay off? Ivan, are we still a little exuberant?

[Ivan Feinseth]

Well, because the functionality we see today is going to be blown away by the functionality in the future. More and more people are going to rely on this technology for all different aspects. And I do give credit to Tom Siebel, the founder of siebel Systems and C3AI, that I believe he said it, that every company is going to be an AI company. Every company is going to use AI on all aspects of their business, whether it's to manage supply chain, manage pricing, target marketing. That the functionality is going to increase and people are going to use. Just like you said when Carol, when you wanted to understand more about Meta's tax charge, you googled it.

[Max Chavkin]

Yeah.

[Ivan Feinseth]

And we are going to get more information. I did. Also I like Perplexity. I looked up. It looked it up in perplexity, kind of. And I did understand what they said, but it gave me a little more detail and, and you know it's right, Ivan.

[Max Chavkin]

You know it's right.

[Ivan Feinseth]

Yeah.

[Max Chavkin]

Is it right? What Perplexity gave you back is right?

[Ivan Feinseth]

Yes. Well, because I do understand that the tax that it's really the timing and charge and of managing your tax payment and your tax liability that you tend to offset through capital investment, through R and D and other types of things that happen. So it's really timing issues on how your accrued tax liability or your accrued tax asset falls versus the taxes you will eventually have due or the tax credit you will eventually earn.

[Stacey Vanek Smith]

I just want to know is this Sora? Is this really Ivan Feinseth? I just want to make sure it is really me. Listen, perfect guest to talk about all of this. So much coming at us. Ivan. Thank you so much. Really appreciate it. Ivan Finseth, Research Director Chief Investment Officer over at Tigris financial partners. Over 500 million in assets under management management as of the middle of this year joining us right here in New York City.

[Max Chavkin]

Stay with us. More from Bloomberg Businessweek Daily coming up after this.

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[Max Chavkin]

Okay, once again got to bring in what's going on with these companies? Microsoft sliding after reporting that modest EPS beat. We're waiting for Microsoft's call to get forward guidance. So that's important to keep in mind. A small 1.2% beat on adjusted diluted EPS. Alphabet soaring as a cloud demand supercharges earnings and then meta platforms. Looking at our live blog on Meta earnings again waiting for the call to start. Shares of Meta platform still down about seven and a half percent. We're going to talk to Kurt Wagner in just a few minutes and really get the details on this one time charge. Yeah, close to $16 billion because still got to get to the bottom of.

[Stacey Vanek Smith]

That well and I can't ignore and you pointed this out this, you know, expecting total expenses to significantly increase in 2026, continuing to invest at historic levels in AI. So the spend is on. Let's see what Brooke May has to say. She's managing partner at the independent wealth management and advisory firm May Wealth. They have one and a half billion dollars in assets under management. She is with us from Carmel, Indiana. Brooke, nice to have you here. A lot of earnings. What jumps out especially among what we've got three of the Mag 7 out with that, with the reports. Let me try that again. What jumps out at you?

[Brooke May]

Yeah, you know it's mixed and you know, really right now with the street one to see is that firms are able to spend on AI and monetize it. So those who can are going to be rewarded. When we look at the MAG7 earnings expectation Earnings are expected to be up about 15% this quarter. As we saw Tesla had disappointing earnings last week and so we really want to see decent earnings growth from the other six names. We've got three reporting today, we've got Apple and Amazon reporting tomorrow. And you know, not only is it earnings growth but it's what are they spending to. To to improve the business. How are they investing in AI and then how are they going to monetize it?

[Stacey Vanek Smith]

So are these decent earnings in your view from Metta, Microsoft and Alphabet? Because the only one that's really moving up in the aftermarket is Alphabet. So as you said, we want to see decent earnings. So we got three of the big Mag seven that reported. Are they decent earnings? Because right now got Meta dropping in the aftermarket and you also have Microsoft under pressure here in the aftermarket.

[Brooke May]

Mm. Yeah. Alphabet is, is the horse that I would put my money on right now. You know, the, they've blown their earnings out of the water. You know, not only did they have Good earnings growth. But you know, the cloud growth was very strong. You know, search is strong. You know, the street wants to see that Gemini can compete with not just chatbots, but other social media search engines. And you know, we're seeing that in addition to, they want to see that AI driven ad performance is improving. Plus YouTube, you know, what, what does the ad revenue look like there? So there's a lot going on with each of these companies, but right now Alphabet is the one who's really knocked the ball or knocked the COVID off the ball.

[Max Chavkin]

But is that just, is that, is that just quarterly or. You know, we, we just spoke to Ivan Findseth and Anurag Rana and I think it was Anurag who made the comment about these companies are planning for the next three to five years and Wall street is looking now looking at the next one or two quarters.

[Stacey Vanek Smith]

Exactly. I think Angelo Zeno, also Microsoft, he said it's not really so important this quarter. He said, you know, expect to double their revenue like you know, over. I forget the time frame, but that's the longer term for Microsoft in particular.

[Max Chavkin]

So Brooke, is your, is your comment just about this quarter or is it about the long run with, with Alphabet being the horse to pick?

[Brooke May]

I think it varies quarter by quarter. You know, when we look last quarter, the Mag 7, they were expected to grow their earnings similar to this quarter, around 14% and ear growth is actually over 26%. So it's going to vary quarter by quarter. These companies, you know, are evolving and the platform, the AI space is evolving very quickly and some are figuring it out, some have been late to, to invest in AI and now are playing catch up. Alphabet though is one that we feel like really is a front runner in addition to Nvidia right now. If I had to pick two of the seven, that's where I would put my money.

[Stacey Vanek Smith]

Let's talk meta just real quickly. And we want to bring in Kurt Wagner, Bloomberg News senior technology reporter.

[Max Chavkin]

He's working. Can you see? I see him. He's working right now.

[Stacey Vanek Smith]

We are too.

[Kurt Wagner]

We're trying to like have a heads up. You were coming to me, I'm over here sending emails.

[Stacey Vanek Smith]

Listen, hey, making the sausage in front of everybody because this is what it is when we get, we get a big drop of earnings. You can do it no matter what. Meta, do you, can you explain this Meta?

[Kurt Wagner]

I'll do, I'll do my best. I mean the numbers weren't bad from a revenue standpoint. They beat Q3 revenue. The guidance for Q4 was right in Line with what they've all, you know, what people were expecting for the holiday quarter, which is always the most important. I think the key here is that they said that their spending in 2026 is going to be way more. They were already spending between 70 and 72 billion this year in capital expenditures. The spending, I think was up, you know, more than 30% now. Next year they said it's going to be meaningfully larger. So if you were sitting here, you know, trying to get comfortable with this idea that Meta is throwing tens of billions per year, hundreds of billions over the next decade on AI, you probably were hoping that the Q4 numbers were going to be a home run. Right. Not just an in line sort of. We'll do what we said we were going to do. You want that to be a lot larger. If you're going to hear that the spending is going to ramp up as dramatically as it will in 2026.

[Max Chavkin]

So. So Kurt, you think the increased projection for expenses or the. Is what's moving the stock lower rather than this one time tax charge, which. Yes, we're going to ask you about.

[Kurt Wagner]

That'd be my, that'd be my take because the one time tax charge is one time. One time, one time. And it's for a quarter that's now over and done with. And Meta, if you, you know, take them at their word, says that this big beautiful bill, which is what they attributed this one time tax charge to, is actually going to be the bill is going to help them tax wise, long term. So I think if you believe that to be the case, there was a one time accounting thing in Q3. And to me the bigger flag is that they are, you know, again, going to meaningfully increase spend here.

[Max Chavkin]

That's really helpful. Look, you wrote the book on Twitter before it was called X. You cover social media platforms. You are not a tax attorney. But I'm still going to ask you this question. Sure.

[Stacey Vanek Smith]

Why.

[Max Chavkin]

Why is Meta platforms the only one that's reporting this one time expense, at least thus far?

[Kurt Wagner]

Should I go back to my phone, pretend to be emailing so don't have.

[Max Chavkin]

To answer this question?

[Kurt Wagner]

I don't know. I don't know. I'm told that this is something that actually other companies are dealing with. I was told IBM and Broadcom similarly, who have already reported had similar tax things. I presume maybe other companies will as well. So I do. I don't think they're the only one. Perhaps it's sort of getting a little bit more of attention than others. It's also possible that Meta is choosing, I believe they chose to do this giant one time tax thing. It's possible others maybe the implication being that maybe they could spread this out. You're right. I'm not a tax expert so I'm sort of offering a little bit of, you know, guesswork.

[Max Chavkin]

It's helpful though.

[Kurt Wagner]

But I do, I don't think they're the only ones, number one. And number two, it's possible other companies are handling it in a slightly different way. That that's what I will leave you with. I can't say for, you know, don't ask any follow ups. That's where I'm going to start.

[Stacey Vanek Smith]

Maybe they thought it was going to be a distraction from that they're spending more money, I don't know. But it's like really got me scratching my head. Kurt, do not go anywhere. We're going to come back to you in just a moment.

[Max Chavkin]

Emails but we're coming back to you. You can.

[Stacey Vanek Smith]

Okay, come back in just a second. Hey, we want to go back to Brooke May, managing partner at the independent wealth management advisory firm Evans Maywealth. So Brooke, is there an investment play off of what we got from Meta Microsoft and Alpha Alphabet today for you? You mentioned, I think that Alphabet was the name you like. Are you selling Metta? Are you selling Microsoft on this?

[Brooke May]

Microsoft is one I think we're going to have to reassess. When we look at Microsoft, you know, they're not cheap. They're trading at 34 times forward earnings and when you compare that to their growth rate, it's almost a three where, you know, their, their P E is about three times their growth rate. And to us that's expensive. You know, we do want to continue to see momentum in their cloud business and we expect that revenue to continue to be double digits. But you know, Azure, for example, is having a hard time keeping up with demand. The Stock was only up 4% since the last earnings announcement and it sounds like, you know, they might have wiped all of that out today. And so, you know, we need a catalyst and I don't necessarily see the catalyst in the near term for Microsoft to move meaningfully higher.

[Stacey Vanek Smith]

And I should point out that shares of Microsoft have come off their lows in the aftermarket, still down, but just down about 1.3%. So not as negative as we saw earlier. Hey Brooke, thanks so much for breaking all this down with us. Brook May, managing partner at Evans Maywealth, joining us from Indiana.

[Max Chavkin]

I want to bring back in Kurt Wagner. He's Bloomberg News senior technology reporter. He joins us from Denver. And Kurt, I want to talk about the smart glasses, the Ray Ban Metas or whatever superintelligence is working on. This is what Mark Zuckerberg called out in the press release before this one time charge. He, he said, if we deliver even a fraction of the opportunity ahead, the next few years will be the most exciting period in our history. The preceding sentence was met a Superintelligence Labs is off to a great start and we continue to lead the industry in AI glasses. Is this the next computing platform?

[Kurt Wagner]

I'm going to go ahead and say yes, because it's the only one that I think seems to be being built at the moment that I can think of. Like that is in the way you think of a phone, right? Or a tablet or a personal device. And so 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. I think the challenge is going to be as with everything one can you make the technology so small and subtle that, that wearing these glasses on your face doesn't feel weird or look weird because people aren't going to want to do it if they don't feel natural wearing the technology out in public. And then, you know, I think too, meta's got going to have a lot of competition. We've already seen Apple, you know, coming up with their own device, Google coming up with their own device. I'm sure there will be others. So, you know, on the one hand, if everyone is building towards this, it makes me think that it's even more likely that this becomes the thing after the phone. On the other hand, it's going to be harder and harder for Meta to maintain that lead that I do think they have right now. They're kind of the first one, you know, they're the first ones with like a mainstream kind of hit in terms of the meta Ray Bans. But, you know, that has a lot of technological sort of steps still to go before it, I think reaches that, that level that we were just talking about.

[Stacey Vanek Smith]

So what's your number one question that you would ask Mark Zuckerberg today or he and his team?

[Kurt Wagner]

Well, I would want to know if, if he's got more investments coming in the air space. And I don't mean just like investing in chips or investing in data centers, but like we've seen some of these other tech companies make become equity shareholders or equity stakeholders and other AI startups. And because Metta can't necessarily acquire a lot right now, you may recall they're dealing with a lot of antitrust stuff in dc. We spent several weeks at their trial earlier this year. It feels like acquiring AI for them is going to be hard, but the idea of a mega investment seems more reasonable. So, you know, as we're talking about AI and spending, I'd be curious to know, is all this going towards infrastructure or are you, you know, you being Meta going to become a major shareholder in one of these other promising AI platforms?

[Stacey Vanek Smith]

You know, it's interesting, they do talk about continuing to build their own infrastructure and contracting with third party cloud providers. So yeah, I mean, this is how it's going to be, right? We're going to. We'll look for some more news certainly on this when it comes to Meta and all of them. Kurt, thank you. Thank you.

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[Kurt Wagner]

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[Stacey Vanek Smith]

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