Closing Bell: Microsoft, Meta & Ford Report Earnings

On this episode of Stock Movers:

Listen for comprehensive cross-platform coverage of the US market close as heard on Bloomberg Television, Bloomberg Radio, and YouTube with Romaine Bostick, Scarlet Fu, Carol Massar and Tim Stenovec.

- Microsoft (MSFT) reported better-than-expected growth in its cloud business, which it says brought in more than $75 billion in the past year, as the company continues to commercialize artificial intelligence services. The closely watched Azure cloud-computing unit posted a 39% rise in sales during Microsoft’s fiscal fourth quarter, the company said in a statement on Wednesday. Analysts projected 34% revenue growth. The company said sales at the cloud division grew 34% to more than $75 billion during the year ended in June, the first time the company has disclosed a revenue figure for Azure, which sells computing power and other services to businesses.Overall, sales rose 18% to $76.4 billion during the quarter. Net income was $3.65 a share. Analysts on average estimated $73.9 billion in revenue and per-share earnings of $3.37. Shares initially rose 7% afterhours on the news.

- Meta (META) topped projections for second-quarter sales and gave a stronger-than-expected forecast for the current period, a sign that the social media company’s advertising business is still growing quickly enough to support aggressive spending on artificial intelligence. Shares jumped as much as 10% in late trading. Third-quarter sales will be $47.5 billion to $50.5 billion, Meta said in a statement Wednesday, with the midpoint of that range exceeding the average analyst estimate of $46.2 billion, according to data compiled by Bloomberg. The social media giant, which owns Instagram and Facebook, reported second-quarter revenue of $47.5 billion. Meta lifted the low end of its forecast for 2025 capital expenditures as it continues to invest heavily in the talent, infrastructure, data centers and energy needed to compete in a fast-moving AI race. The company now expects to spend $66 billion to $72 billion this year. The projection was adjusted higher in April to account for ongoing trade disputes and AI investments. Meta stock was up 18.7% so far this year before Wednesday’s report.

- Ford (F) said profit will fall as much as 36% this year as President Donald Trump’s tariffs reduce earnings by about $2 billion, more than the automaker previously expected. Adjusted earnings before interest and taxes will be $6.5 billion to $7.5 billion, Ford said Wednesday, restoring guidance it had suspended in May over uncertainty surrounding Trump’s trade policies. That’s down from the $7 billion to $8.5 billion it initially forecast, and represents a sharp drop from last year’s earnings of $10.2 billion. The update highlights how even Ford, which manufactures the most cars in the US of any automaker, is being squeezed by new trade barriers imposed by the White House. Trump’s tariffs on imported vehicles, auto parts, steel and aluminum – as well as goods from key US trading partners – have ballooned costs for Ford and its rivals. Shares fell after the close of regular trading.

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Episode Transcript

Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.

Speaker 2 (00:09):
This is the closing bell on the stock mover's report.
The company's making moves at the close of US trading
with Carol Master, Tim Stenebeck, Romain Bostick, and Scarlett Foo earning.

Speaker 3 (00:22):
It's crossing the wire qualcomm.

Speaker 4 (00:24):
Indeed qual common. Let's go right to the outlook. Fourth
quarter revenue they're looking, folks for ten point three billion
to eleven point one billion. That's above what the street
is expecting, at least on the higher end. Ten point
sixty one billion is what the street's expecting. Fourth quarter
ad just at EPs more for the outlook two seventy
five to two ninety five. The estimate on the street
is for two eighty four. And again seeing let's go

(00:46):
back to the past quarter. Third quarter just ADPs two
seventy seven. That's better by a nickel in terms of
what the street was expecting. And third quarter ad justed
revenue of ten point thirty seven billion, pretty much in
line with what the street was expecting. Tim ten point
thirty three billion, Doc, little change is down about six
tensive a percent here in the after mark.

Speaker 5 (01:02):
Yeah, pulling up that earnings release here the company actually
it's not even up yet on their investor relations website.
That's how early these numbers actually came out. Worth repeating.
The fourth quarter revenue outlook, though, does seem to be
what is moving the stock in the after hours, ever
so slightly, bouncing between gains and losses down about half
a percentage point. The company says nine million. Excuse me,

(01:24):
The company says capex at seven hundred and eighty five
million dollars. The company also said third quarter adjusted revenue
coming in just above estimates at ten point three seven
billion dollars. Once again, fourth quarter revenue that outlook ten
point three billion to eleven point one billion. The estimate
was for ten point six one billion dollars.

Speaker 3 (01:40):
Yeah.

Speaker 6 (01:40):
The promising sign in there, tim would be that there
are signs of resilience and growth in the smartphone sector,
and of course we'll be waiting for a read through
on that that. When you're thinking about these large technology giants,
the consumer exposure matters here a little bit. The high
end phones though, are where they're doing even better, and
so the question about that case shape for throughout the

(02:00):
course of this earning season resumes.

Speaker 3 (02:03):
Yeah, and it's kind of interesting too.

Speaker 1 (02:04):
We should point out we're also expecting to get earnings
out of ARM, the UK chip maker, and of course
we're waiting on some of the big heavy weights in
the indexes. That includes Microsoft, Meta, also expecting Ford Albumarl,
LAMB Research, eBay, and Western Digital, amongst others.

Speaker 2 (02:18):
Guys.

Speaker 4 (02:19):
Yeah, and it's just a reminder that not all tip
companies are the same. So Quadcom maybe giving a little
bit of a better forecast, but we've been getting from
Texas Instruments, Intel, which also gave more cautious outlooks. So
it's just a reminder you got to take a look
at each of these companies and what their fundamentals are
and really what markets they play into forward reporting.

Speaker 5 (02:37):
In just a couple of minutes. We've got to see
an interview with the company CEO coming up in.

Speaker 3 (02:41):
Just about a half hour.

Speaker 5 (02:43):
We're also expecting of course Meta platforms a little later too.

Speaker 6 (02:47):
Yeah, I've got to say, just to kind of get
back to what we were talking about with Qualcommer, this
is a stock that's only been up three point five
percent this year, so there's a lot of room here
for the upside of investors choose to read.

Speaker 3 (02:57):
It that way.

Speaker 6 (02:58):
But you're looking at it turn further negative here down
up three percent.

Speaker 1 (03:02):
All right, Microsoft turnings are crossing the wire right now,
So to his arm, let's start with Microsoft. The initial
knee jerk reaction to the upside as the company says
revenue in the most recent quarter seventy six point four
to four billion, a beat the street was looking for
seventy three point nine billion. Intelligent cloud revenue also coming
in slightly above SIMN it's at twenty nine point eight
eight billion.

Speaker 3 (03:22):
As you're another cloud revenue.

Speaker 1 (03:24):
XFX up about thirty nine percent in the border.

Speaker 3 (03:27):
The street was looking.

Speaker 1 (03:27):
For a gain of about thirty four percent in the quarter.

Speaker 3 (03:31):
I just want to point out one other quick thing.

Speaker 1 (03:32):
I know it's a much smaller business, but when it
comes to the productivity and business revenue here you did
actually see a beat there as well, thirty three billion dollars.
And on the personal computing side, Tim Carroll, thirteen and
a half billion, Street was looking for twelve point seven.

Speaker 4 (03:46):
I got to say, you know, I was curious about
in terms of valuations for this one because Microsoft will
fascinating to watch the trade here because it's bouncing around.
I mean, this is a stock that's up twenty two
percent year to date, and we are seeing off of
these numbers initially a gain of about five percent, So
investors definitely liking.

Speaker 3 (04:01):
What they got.

Speaker 4 (04:02):
I've got to say that as you're and other cloud revenue,
maybe that's what's catching their attention. Up almost forty percent
or up thirty nine percent, and that is easily beating
the estimate of thirty four point two percent.

Speaker 5 (04:12):
Yeah, Satinadella, Chairman and CEO of Microsoft, saying, quote, cloud
and AI is the driving force of business transformation across
every industry and sector. We're innovating across the tech stack
to help customers adapt and grow in this new era.
And this year as you're surpassed seventy five billion dollars
in revenue up thirty four percent, driven by growth across
all workloads.

Speaker 6 (04:32):
And even beyond that, I'm looking at cap X numbers
as well that came in for the quarter at least
lower than expected. So that outperformance comes on the heels
of not overspending either. I know a lot of investors
are out there looking to make sure that they're getting
a return on their buck, and you are seeing Microsoft
just surging after this report because to your point, Carol Azora.

Speaker 3 (04:54):
Was really a big part of.

Speaker 6 (04:56):
What investors were looking for and making sure that more
and more of that revenue was being driven by the
AI initiative.

Speaker 4 (05:02):
And I guess I would say when it comes to AI,
got to think about the Microsoft relationship with chat GPT.
You know, they are kind of the king queen, if
you will, in terms of what has set us going
in terms of AI.

Speaker 3 (05:13):
We've got forward crossing the bloueb.

Speaker 1 (05:15):
Yeah, let's go to Ford for a second. We'll get
back to Microsoft. Those earnings crossing the wire. Remember, the
company had removed its guidance a quarter ago. It is
now reinstating that guidance for the full year, and it
does appear that guidance is lower than the one it
gave before, saying that it expects earnings before interest in
taxes so e BIT on an adjusted basis six point
five to seven point five billion dollars. The low end

(05:36):
of that range is slightly below the average street estimates,
which was for six point eighty four billion. Also interesting,
the company is trying to quantify the impact from tariffs,
saying they see a tariff headwind of about two billion dollars.
That's up from a previous guidance of about one and
a half billion dollars, though they did point out that
that number could be as high as a three billion,
though they expect about one billion.

Speaker 3 (05:55):
Dollars in mitigation.

Speaker 1 (05:57):
If you will not quite sure what that means, that
brings back down to two billion dollars.

Speaker 5 (06:01):
Well, speaking of high numbers, Meta share surging in the
AFT hours up about three point six percent. The company
sees third quarter revenue at forty seven and a half
billion dollars to fifty billion dollars. The estimate was for
forty six point two billion dollars. The company sees total
revenue for the year to be in the range of
forty seven point five to fifty billion dollars. It sees

(06:22):
expenses to be one hundred and fourteen billion to one
hundred and eighteen billion, so expenses were expected to be
one hundred and thirteen to one hundred and eighteen billion dollars.
Second quarter revenue once again beating estimate second quarter EPs
coming in at seven dollars and fourteen cents. That's massively
above expectations of five dollars and eighty nine cents. Second
quarter revenue expected to be at forty four point eight

(06:45):
three billion forty seven point five to two billion. Is
the print share surging in the after hours up six
point seven percent in climbing.

Speaker 4 (06:53):
Yeah, and that's after Meta has been quite an now performer.
It's up about nineteen percent year to date. Hey, let's
go to some commentary and context saying they expect third
quarter twenty twenty five total revenue to be in the
range of forty seven point five to fifty point five billion,
And they say, while we are not providing an outlook
for the fourth quarter revenue, we would expect our year
over year growth rate in the fourth quarter of twenty

(07:14):
twenty five to be slower than the third quarter as
we lap a period of stronger growth in the fourth
quarter of twenty twenty four. So they expect full year
twenty twenty five total expenses to be in the range
of one hundred and fourteen to one hundred and eighteen billions,
So that's narrowed from their prior outlook of one thirteen
to oney eighteen billion and reflecting a growth rate of

(07:34):
twenty to twenty four percent year over year, And currently
expect twenty twenty five capex including principal payments on finance
leases to be in the range of sixty six to
seventy two billion, narrowed from their prior outlook of sixty
four to seventy two billion, and up approximately thirty billion
year over year at the midpoint.

Speaker 6 (07:53):
I also want to look at ARM here as well,
because they're forecasting profit lower than expected, they're ramping up spending. Here.
You do see shares down or more than five point
seven percent after the market after saying that fiscal second
quarter earnings will be twenty nine cents to thirty seven
cents to share. Analysts had seen thirty five cents on average.

(08:13):
So there you go. Softer profit expectations there.

Speaker 1 (08:16):
All Right, recoil quickly eBay those shares higher in the
after hours trade. Guidance for the third quarter of two
point sixty nine to two point seven to four billion,
above street estimates on both the low and the high
end of the range. For the most recent quarter, the
company did beat on both the top and bottom line,
revenue growing six percent tim to two point seven three billion.

Speaker 5 (08:34):
All Right, shares a robin hood up four percent in
the after hours. The company is not giving a twenty
twenty five outlook for operating expenses, but second quarter adjusted
EBADAH was a big beat, coming in at five hundred
and forty nine million dollars. Second quarter net revenue also beat,
at nine hundred and eighty nine million dollars. Once again,
shares hired by about four and a half percent.

Speaker 2 (08:53):
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