Sam Dickie: Fisher Funds expert on Meta and Microsoft reporting their results

Meta and Microsoft are among the big tech companies that just released their quarterly results after the stock market closed, and there's more results to come.

Meta shares were up 9 percent, but Microsoft stock was down about 5 percent.

Sam Dickie from Fisher Funds unpacked the data further.

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Episode Transcript

Speaker 1 (00:09):
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Speaker 2 (00:16):
The US results season is in full swing. Got two
of the big ones, METSA and Microsoft reporting just in
the last few hours, and obviously across what it means
for investors is Sam Dickey from Fisher Funds US with
US now.

Speaker 3 (00:27):
Happy New Year, Sam, happy to you here there, welcome back.

Speaker 2 (00:30):
Thank you very much.

Speaker 3 (00:30):
Back.

Speaker 2 (00:30):
Now give give me the highlights of what you think
you saw the results for both of these companies.

Speaker 3 (00:36):
Definitely two contrasting fortunes. So Meta's share price was up
six percent after market earlier today and Microsoft's was down
six percent, and a couple of themes or reasons there.
Both companies revenue beat expectations, and that's been an ongoing
theme really for the past couple of years. These companies
are either taking market share or growing the size of

(00:58):
their market in cloud, compute, advertising or software, and a
lot of that growth has been supercharged by AI, which
brings me to the cost did you generate that revenue?
And that was the primary reason why there was a
disparity in the performance. So both companies have been increasing
their capital expenditure recently in recent quarters and sorry rapidly

(01:19):
in recent quarters, and this quarter was no different. So
for context, we spoke about this last year. The year
ahead capex for both companies combined was expected to be
about one hundred and forty billion this time last year.
It's now expected to be two hundred and sixty billion,
and that eighty billion dollar increases largely on AI infrastructure
and chips. So, in short, though Meta outperformed because it

(01:40):
beat revenue expectations by more. So both are spending an
accelerating amount, but Meta is on the face of it,
getting more return out of its spend.

Speaker 2 (01:49):
And so what do you see as the key key
themes from these results.

Speaker 3 (01:53):
I think it's what we talked about last week. I
talked about with Ryan is a key risk for investors
to watch in twenty twenty six is big tech companies
in the US and no longer being given a blank
check by the market to spend on AI, chips and
infrastructure at any cost. So they have to show accelerating
revenue or set another way. They have to justify the

(02:13):
massive dollar has been invested by showing a decent return
on that spend. And we've got Google and Amazon next week.
That will be extremely closely watched. And indeed, any company
that is just deploying capital at scale into AI must
start showing a return.

Speaker 2 (02:29):
Do you think that this gives any insight into what
we can use for the rest of the earning season.

Speaker 3 (02:34):
I think that we another wrinkle actually, on top of
keeping an eye on how much these guys are returning
on that massive capex is open Ai, which is the
company behind chat GPT, as we know, is quite out
of favor. And remember last year we talked about the
disconnect between the fifteen to twenty billion of revenue that
open ai generates and the more than one trillion dollars

(02:56):
of AI infrastructural bility that they've committed to. So anything
associated with that has been under pressure. Oracle share prices
down to fifty percent, and remember they had committed to
spend huge amounts to house open AI's chips and Microsoft
today open ai accounts for about forty five percent of
their pipeline of business and their massive cloud operation. So
investors are a bit twitchy and they're saying, are open

(03:19):
Ai good for it? So anyone associated with open Ai
during this earning season should be watched closely.

Speaker 2 (03:25):
Very interesting. Hey Sam, as always, it's lovely to talk
to you mate. We'll talk to you next week. Look
after yourself, that is Sam Dickey Fisher Funds.

Speaker 1 (03:31):
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