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Speaker 1: The US results season is in full swing. Got two

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Speaker 1: of the big ones, Meta and Microsoft reporting just in

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Speaker 1: the last few hours, and obviously across what it means

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Speaker 1: for investors is Sam Dickey from Fisher Fund, who is

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Speaker 1: with us now. Happy New year, Sam.

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Speaker 2: Happy to you here there, welcome back.

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Speaker 1: Yeah, thank you very much.

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Speaker 2: Back.

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Speaker 1: Now give me the highlights of what you think you

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Speaker 1: saw the results for both of these companies.

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Speaker 2: Definitely two contrasting fortunes. So Meta's share price was up

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Speaker 2: six percent after market earlier today and Microsoft's was down

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Speaker 2: six percent, and a couple of themes or reasons there.

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Speaker 2: Both companies revenue beat the expectations, and that's been an

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Speaker 2: ongoing theme really for the past couple of years. These

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Speaker 2: companies are either taking market share or growing the size

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Speaker 2: of their market in cloud, compute, advertising or software, and

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Speaker 2: a lot of that growth has been supercharged by AI,

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Speaker 2: which brings me to the cost to generate that revenue,

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Speaker 2: and that was the primary reason why there was a

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Speaker 2: disparity in the performance. So both companies are being increasing

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Speaker 2: their capital expenditure recently in recent quarters and sorry rapidly

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Speaker 2: in recent quarters, and this quarter was no different. So

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Speaker 2: for context, we spoke about this last year. The year

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Speaker 2: ahead capex for both companies combined was expected to be

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Speaker 2: about one hundred and forty billion this time last year.

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Speaker 2: It's now expected to be two hundred and sixty billion,

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Speaker 2: and that eighty billion dollar increases largely on AI infrastructure

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Speaker 2: and chips. So, in short, though Meta outperformed because it

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Speaker 2: beat revenue expectations by more. So both are spending an

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Speaker 2: accelerating amount, but Meta is on the face of it,

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Speaker 2: getting more return out of its spend.

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Speaker 1: And so what do you see as the key key

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Speaker 1: themes from these results?

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Speaker 2: I think it's what we talked about last week. I

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Speaker 2: talked about with Ryan is a key risk for investors

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Speaker 2: to watch in twenty twenty six is big tech companies

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Speaker 2: in the US and no longer been given a blank

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Speaker 2: check by the market to spend on AI, chips and

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Speaker 2: infrastructure at any cost. So they have to show accelerating

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Speaker 2: revenue or set another way. They have to justify the

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Speaker 2: massive dollars been invested by showing a decent return on

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Speaker 2: that spend. And we've got Google and Amazon next week

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Speaker 2: that will be extremely closely watched. And indeed, any company

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Speaker 2: that is just deploying capital at scale into Ai must

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Speaker 2: start showing a return.

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Speaker 1: Do you think that this gives any insight into what

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Speaker 1: we can use for the rest of the earning season.

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Speaker 2: I think that we are Another wrinkle actually, on top

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Speaker 2: of keeping an eye on how much these guys are

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Speaker 2: returning on that massive capex is open Ai, which is

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Speaker 2: the company behind chat GPT as we know, is quite

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Speaker 2: out of favor. And remember last year we talked about

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Speaker 2: the disconnect between the fifteen to twenty billion of revenue

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Speaker 2: that open ai generates and the more than one trillion

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Speaker 2: dollars of AI infrastructurability that they've committed to. So anything

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Speaker 2: associated with that has been under pressure. Oracle share prices

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Speaker 2: down to fifty percent, and remember they had committed to

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Speaker 2: spend huge amounts to house open AI's chips and Microsoft

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Speaker 2: today open ai accounts for about forty five percent of

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Speaker 2: their pipeline of business and their massive cloud operation. So

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Speaker 2: investors are a bit twitchy and there saying are open

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Speaker 2: Ai good for it? So anyone associated with open Ai

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Speaker 2: during this earning season should be watched closely.

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Speaker 1: Very interesting. Hey Sam, as always, it's lovely to talk

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Speaker 1: to you mate. We'll talk to you next week. Look

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Speaker 1: after yourself. That is Sam Dickey Forsher funds.

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Speaker 2: For more from Hither Duplessy Allen Drive.

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