Sales at Microsoft’s closely watched cloud division, its biggest revenue driver that includes its Azure cloud computing platform, also beat forecasts, climbing 22% from a year ago to $38.9b.
Microsoft has been one of the main beneficiaries of the mainstream adoption of AI, with surging demand for its Azure data centres and enthusiasm about its partnership with market leader OpenAI propelling it to become the world’s third-most valuable public company.
Its shares, which are up about 16% year to date, rose 0.8% in after-hours trading. At $3.3 trillion, Microsoft’s valuation trails only those of Apple and Nvidia.
Rival Google’s stock price rose 4% after it posted similarly strong growth in its cloud business on Tuesday.
Meta sees AI spending accelerating as earnings top forecasts
Meta cited “strong momentum” in its numerous bets on artificial intelligence as quarterly revenue and earnings topped Wall Street expectations, and said spending on the technology will continue to accelerate into 2025.
Revenues in the third quarter increased 19% to $40.6b, at the top end of its guide range and a whisker above Wall Street estimates of $40.3b. Net income jumped 35% to $15.7b, well above consensus of a rise to $13.6b.
Meta shares, which are up more than 70% in 2024, were down about 3% after the results were released.
“We had a good quarter driven by AI progress across our apps and business,” chief executive Mark Zuckerberg said, pointing to “strong momentum” in Meta AI, the company’s chatbot and the adoption of its open large language model Llama by businesses and developers.
He also pointed to recent excitement around its AI-powered glasses, part of a partnership with Ray-Ban eyewear.
The company said it anticipated fourth-quarter sales in the range of $45b-$48b. The consensus estimate was $46.2b, according to S&P Capital IQ.
Meta also raised the bottom of its range for full-year 2024 capital expenditure guidance from $37b-$40b to $38b-$40b.
It added that it expected a “significant acceleration in infrastructure expense growth” next year due to the “higher growth in depreciation and operating expenses of our expanded infrastructure fleet”.
Shares of Alphabet, the first of the five “Magnificent Seven” megacap stocks that reported results this week, rose 2.8% after the company on Tuesday beat expectations for third-quarter revenue and profit.
Alphabet helped to offset falling chip stocks, weighed by dour forecasts from Advanced Micro Devices and Qorvo , which fell 10.6% and 27.3%, respectively.
Meanwhile, shares of Super Micro Computer plunged 32.6% after Ernst & Young resigned as the company’s accountant.
Nvidia slipped 1.4%.
Written by: Stephen Morris and Hannah Murphy in San Francisco. Additional reporting by Abigail Summerville of Reuters.
© Financial Times
