Bloomberg Talks: Instant Reaction – Microsoft, Meta Shares Slip After Earnings

Date: October 29, 2025
Host: Carol Massar, Tim Stenovec
Guests: Anurag Rana (Bloomberg Intelligence Senior Tech Analyst), Ivan Fineseth (Research Director and CIO, Tigris Financial Partners)

Episode Overview

This rapid-reaction episode delivers in-depth analysis of the latest quarterly earnings from three of the “Mag 7” tech giants: Microsoft, Meta (Facebook), and Alphabet (Google). Following volatile after-hours stock moves—Microsoft and Meta dropping, Alphabet rallying—the Bloomberg team unpacks the numbers, investor reactions, and broader implications for the tech and AI landscape. The focus is on unpacking the story behind the market’s response, including tax quirks, capital expenditures, and narratives around AI investment.

Key Discussion Points & Insights

1. Meta’s Earnings: Tax Charge Sparks Selloff

• Meta shares fell sharply (down ~8%) after reporting earnings, surprising many with a dramatic drop in net income.
• A $15.93 billion non-cash tax charge related to the new U.S. corporate alternative minimum tax (from the "One Big Beautiful Bill Act") slashed reported net income to $2.71 billion, vs. $18.64 billion without the charge. (02:23–03:05)
  • Carol & Tim probe why this hit appeared unexpectedly and why it applied to Meta but not peers.
  • “It reduces net income to something that looks way below what everybody thought it would be.” — Tim Stenovec (02:54)
• CapEx spending and AI investment are flashing as investor concerns.
  • Meta guided for capex growth to be "notably larger" in 2026 than 2025, on top of a 32% year-over-year expense increase (03:36–04:31).
  • Q3 ad revenue beat expectations: $50B vs. $48.59B estimate.

2. Microsoft: Beats But Disappoints on Outlook/Spending

• Microsoft’s revenue and profit beat Wall Street estimates, yet shares slipped about 3.5%.
  • Q1 revenue: $77.67B (est. $75.55B)
  • Azure/cloud growth: +39% vs. 37% est.; earnings per share: $3.72; operating income: $37.96B (above estimates). (04:56–05:24, 07:34)
• CapEx spending higher than guided—seen as strength by some analysts, worry by others.
  • “The margins actually stood out, way higher than what we were anticipating.” — Anurag Rana (05:57)
  • The debate: will high spending pay off, or is the market looking for more cost control?
• Cloud ‘land grab’ continues, but expectations are extremely high.
  • Azure’s growth outpacing Google Cloud, but investors hyper-critical: “People are probably just splitting hairs at this point.” — Anurag Rana (07:58)
• OpenAI stake seen as strategic for tech, not just investment returns.
  • “They will sell more products, more cloud services using that [OpenAI] technology than they would just on the share side of it.” — Anurag Rana (09:07)

3. Meta’s One-Time Tax Hit: Accounting Issue, Buying Opportunity?

• Ivan Fineseth argues the one-time charge is “a non-event” and a buying opportunity.
  • “It caused a spike in their tax rate—87% for the quarter. It actually goes down significantly going forward... It’s an accounting issue.” — Ivan Fineseth (11:07)
  • Explains that alternative minimum tax applies to Meta due to "largest deferred tax asset," stemming from R&D timing and deductions (13:29).

4. AI and CapEx: Macro Themes for Big Tech

• All three companies (Meta, Microsoft, Alphabet) are ramping up AI-related capex.
  • “This AI investment theme is powerful, and the companies leading it are Meta, Google and Microsoft. You gotta buy on any weakness.” — Ivan Fineseth (15:03)
• The market grapples with high spending vs. long-term payoff.
  • “We are in the first inning of the world series of AI-driven global economic growth. This trend is going to continue and be game-changing.” — Ivan Fineseth (17:01)

5. Margins and Monetization: Focus on Meta

• Meta’s operating margin dropped (40% from 43%). Not seen as a major concern by Ivan Fineseth.
  • “Gross margin can contract, but your economic margin can increase... That is the most powerful driver of shareholder value creation.” — Ivan Fineseth (18:09)
• Reality Labs posted a $4.4B quarterly loss; high investment continues.
  • “This is going to be what the cell phone was in the mid-90s.” — Ivan Fineseth on Meta’s AR/VR eyewear (19:40)

6. Alphabet: The Positive Outlier

• Alphabet (Google) shares up ~6% after strong earnings.
  • Cloud growth, big wins, capex raised to $91–93B (was ~$85B), Gemini AI app at 650 million active users (21:10–22:19).
  • “You gotta spend money to make money, Carol.” — Tim Stenovec (22:07)
• Underlying conviction: AI/Cloud investments will yield exponential utility and returns over time.
  • “Every company is going to be an AI company... The functionality we see today is going to be blown away by the functionality in the future.” — Ivan Fineseth (22:36)

Notable Quotes & Memorable Moments

Meta’s Big Tax Surprise

• "The street is not buying that right now." — Tim Stenovec, on Meta's tax charge explanation (03:34)
• "This is really a non-event... It’s an accounting issue and... any weakness is a buying opportunity in the stock because there’s so many positive long-term trends." — Ivan Fineseth (11:07)

Microsoft’s Cloud Staying Power

• "When you look at Azure growth of 39%... given that size, that's pretty good. The margins actually stood out, way higher than what we were anticipating." — Anurag Rana (05:57)

AI Investment as the Growth Frontier

• "This AI investment theme is powerful and the companies leading it are Meta, Google and Microsoft. You gotta buy on any weakness." — Ivan Fineseth (15:03)
• “We are in the first inning of the world series of AI-driven global economic growth... AI is going to enhance and create many more jobs than it will eliminate.” — Ivan Fineseth (17:01)

Meta’s Future Bet on Eyewear

• “This is going to be what the cell phone was in the mid-90s.” — Ivan Fineseth (19:40)

Market Perspective

• "The disconnect... is that companies plan for one, three and five years and Wall Street wants to measure everything on a quarterly basis." — Ivan Fineseth (17:01)

Important Timestamps

| Timestamp | Topic | |-----------|---------------------------------------------------------------------------| | 01:49 | Breaking news: Earnings & initial market moves (Microsoft, Meta, Alphabet)| | 02:22 | Meta’s tax charge, net income impact described | | 03:36 | Discussion of Meta’s capex & expense concerns | | 04:56 | Microsoft’s earnings summary & investor disappointment | | 05:57 | Anurag Rana on Azure’s 39% growth and margins | | 07:58 | Cloud sector competition and market-share debate | | 09:07 | OpenAI’s strategic value to Microsoft | | 11:07 | Ivan Fineseth on Meta’s tax charge — “a non-event” | | 13:29 | Why Meta, not others, took the tax hit | | 15:03 | Buy-on-weakness argument for leading AI players | | 17:01 | Long-term AI vision vs. quarterly market focus | | 18:09 | Margin contraction vs. value creation explained | | 19:40 | Meta Reality Labs/eyewear future opportunity | | 21:10 | Alphabet’s cloud growth, record capex | | 22:36 | Tech investment conviction; “Every company is going to be an AI company” |

Conclusion: Takeaways for Listeners

• Meta’s big earnings disappointment stems mainly from an obscure, one-off tax accounting hit. Analysts see future benefit as tax rates drop; some even call the selloff a buying opportunity.
• Microsoft posted strong numbers but hints that sky-high expectations and elevated spending are causing near-term investor trepidation. Yet, Azure’s growth and AI leverage remain key tailwinds.
• Alphabet stands out as the after-hours winner with strong cloud growth, escalating AI investments, and a bullish future AI thesis widely shared by analysts.
• A uniting theme is massive, ongoing investment in AI infrastructure: a ‘land grab’ that divides short-term traders from long-term believers.

The broad message: Despite some market turbulence, industry analysts see sustained AI-led growth as transformative and recommend steadfastness in owning the sector’s leading players—even when the headlines seem alarming.