WEBVTT - Closing Bell: Microsoft, Tesla & Meta Deliver Earnings 0:00:02.520 --> 0:00:07.000 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:10.080 --> 0:00:13.520 This is the closing bell on the stock movers report 0:00:13.760 --> 0:00:16.720 the company's making moves at the close of US trading 0:00:16.880 --> 0:00:21.400 with Carol Masser, Tim Stenebeck, Romain Bostik, and Katie Greyfell. 0:00:22.400 --> 0:00:24.279 All right, guys, and just taking a quick check here 0:00:24.280 --> 0:00:25.919 on the S and P five hundred. It's funny I 0:00:25.920 --> 0:00:27.840 had and I earning Zapp and I was just like, 0:00:28.160 --> 0:00:30.520 have they come across yet? You've got one hundred and 0:00:30.560 --> 0:00:32.839 ninety names, Katie to the upside, three hundred and thirteen 0:00:32.920 --> 0:00:33.760 to the downside. 0:00:33.800 --> 0:00:36.120 All right, let's sick look at the sector performance as 0:00:36.159 --> 0:00:39.640 we count down. Slightly more losers than winners in terms 0:00:39.640 --> 0:00:42.760 of what did perform today, Energy putting up a game 0:00:42.800 --> 0:00:45.440 of about seven tenths of a percent, Tech of about 0:00:45.479 --> 0:00:48.879 six tents of percent as we await these ginormous earnings. Materials, 0:00:48.880 --> 0:00:51.680 communication services also in the green. In terms of what 0:00:51.800 --> 0:00:54.160 didn't perform so hot today on this sped day, real 0:00:54.240 --> 0:00:57.720 estate down by nine tenths of percent, Consumer staples Carol 0:00:57.760 --> 0:01:00.000 also off by about eight tenths of a person. 0:01:00.320 --> 0:01:03.320 Microsoft burning is crossing the wire right now. First here 0:01:03.360 --> 0:01:05.880 on Bloomberg, we take a look at the headline number 0:01:05.880 --> 0:01:08.680 revenue in the most recent quarter, eighty one point two 0:01:08.840 --> 0:01:11.280 seven billion dollars. The street was looking for eighty point 0:01:11.360 --> 0:01:14.560 three EPs, coming in at five dollars and sixteen cents 0:01:14.560 --> 0:01:16.920 a share. I don't have a comparison for you just yet, 0:01:16.959 --> 0:01:19.440 but at the here's the intelligent cloud business thirty two 0:01:19.480 --> 0:01:22.560 point nine to one billion dollars, relatively in line with estimates. 0:01:22.760 --> 0:01:23.880 The street was looking on. 0:01:23.840 --> 0:01:27.400 Average for thirty two point three nine And we shall 0:01:27.440 --> 0:01:30.600 also point at Azure and other cloud revenue XFX that 0:01:30.760 --> 0:01:33.240 was up thirty eight percent in the quarter, right around 0:01:33.319 --> 0:01:34.280 what the street was looking for. 0:01:34.480 --> 0:01:36.600 All right, all right, let's go to Meta also crossing 0:01:36.600 --> 0:01:38.160 the Bloomberg terminal as we speak. 0:01:38.160 --> 0:01:40.080 I'm going to go right to the outlook. 0:01:40.160 --> 0:01:43.280 The first quarter revenue looking at fifty three point five 0:01:43.319 --> 0:01:45.880 billion to fifty six point five The street estimate was 0:01:45.920 --> 0:01:48.160 for fifty one point twenty seven billion. The stock right 0:01:48.160 --> 0:01:51.320 now bop it around, but lower, just about nine tenths 0:01:51.360 --> 0:01:52.520 to the downside. 0:01:52.520 --> 0:01:54.000 Now maybe kicking a little bit higher. 0:01:54.160 --> 0:01:57.720 Let's go to the fourth quarter revenue fifty nine point 0:01:57.760 --> 0:02:00.000 eighty nine billion, better than the street estimate of fifty 0:02:00.240 --> 0:02:04.680 eight point forty two billion AD revenue. So important, let's 0:02:04.680 --> 0:02:06.840 see whether not all those AI investments are paying off 0:02:06.880 --> 0:02:09.959 when it comes to getting more eyeballs and more AD revenue. 0:02:10.080 --> 0:02:12.760 Fifty eight point fourteen billion. That is a beat. 0:02:12.840 --> 0:02:16.000 Fifty seven fifty six point seventy nine was the street estimate, 0:02:16.440 --> 0:02:19.240 and also EPs eight dollars eighty eight cents a share 0:02:19.320 --> 0:02:22.960 versus eight dollars and two cents the year before. So 0:02:23.080 --> 0:02:26.040 again that stock though a little bit lower, down about 0:02:26.440 --> 0:02:27.959 one percent here in the aftermarket. 0:02:28.120 --> 0:02:32.320 That capex number, yes, twenty twenty six company saying cappex 0:02:32.360 --> 0:02:34.840 one hundred and fifteen billion to one hundred and thirty 0:02:34.840 --> 0:02:37.239 five billion. The street was looking for about one to ten. 0:02:37.360 --> 0:02:40.560 So Meta and more importantly, Mark Zuckerberg still all in 0:02:40.720 --> 0:02:42.080 here on the AI build out. 0:02:42.280 --> 0:02:44.919 Well to that point, Mark Zuckerberg saying that we had 0:02:44.960 --> 0:02:48.440 strong business performance in twenty twenty five. I'm looking forward 0:02:48.480 --> 0:02:51.880 to advancing personal superintelligence for people around the world in 0:02:51.960 --> 0:02:55.200 twenty twenty six. Lofty ambitions, of course, but as you 0:02:55.200 --> 0:02:57.519 can see in the after hours reaction, investors want to 0:02:57.560 --> 0:03:01.360 know how do you translate that into actual profits and revenue? 0:03:01.360 --> 0:03:03.120 And the bottom line here, I want to. 0:03:03.080 --> 0:03:05.560 Go back to this this cap capex here, it's in 0:03:05.560 --> 0:03:08.160 the press release, it's a headline in the Bloomberg. We 0:03:08.240 --> 0:03:12.640 anticipate twenty twenty six capital expenditures, including principal payments on 0:03:12.720 --> 0:03:15.200 finance leases, to be in the range of one hundred 0:03:15.200 --> 0:03:17.440 and fifteen to one hundred and thirty five billion dollars, 0:03:17.440 --> 0:03:20.120 with year over year growth driven by increased investments to 0:03:20.120 --> 0:03:24.280 support our metas, superintelligence labs efforts, and core business. That 0:03:24.400 --> 0:03:26.760 is so much higher, and that is also a much 0:03:26.800 --> 0:03:29.360 bigger range than I would have anticipated up to one 0:03:29.440 --> 0:03:32.359 hundred and thirty five billion dollars to spend on capex. 0:03:32.480 --> 0:03:35.040 And just adding to that, the total expense number one 0:03:35.080 --> 0:03:37.160 hundred and sixty two to one hundred and sixty nine billion. 0:03:37.400 --> 0:03:39.480 Street was looking for one fifty one. And this really 0:03:39.520 --> 0:03:40.920 gets to the idea I mean, I mean, we can 0:03:41.000 --> 0:03:43.200 quibble over the numbers from a fundamental basis, but we've 0:03:43.200 --> 0:03:45.840 seen this before with Mark Zuckerberg, where when he basically 0:03:45.840 --> 0:03:48.080 decides he wants to go all in something, whether it 0:03:48.160 --> 0:03:50.760 was the metaverse and the no Legs people, or are 0:03:50.800 --> 0:03:53.120 some of the actual hardware stuff. 0:03:52.800 --> 0:03:53.760 He goes all in. 0:03:53.880 --> 0:03:55.520 Yeah, it doesn't always sort of pay off, but he 0:03:55.600 --> 0:03:57.680 certainly makes big roles of the diet. 0:03:57.560 --> 0:04:00.800 To your point, super intelligence labs, the idea of super intelligence, 0:04:00.880 --> 0:04:05.160 artificial intelligence. That's throughout the press release. The word metaverse 0:04:05.360 --> 0:04:08.600 not in here at all. This company rebranded from Facebook 0:04:08.640 --> 0:04:11.960 to Meta because Mark Zuckerberg a few years ago was 0:04:12.000 --> 0:04:14.480 going all in on the metaverse. That pivot it's took 0:04:14.520 --> 0:04:15.640 completely to AI. 0:04:15.840 --> 0:04:17.920 I'm going to go back to the Microsoft right now, 0:04:17.960 --> 0:04:20.000 down about seven point six percent here, can I just 0:04:20.160 --> 0:04:20.560 one but just. 0:04:20.680 --> 0:04:22.320 At that point for you move on too. I mean 0:04:22.360 --> 0:04:24.920 the Reality Labs business. I mean, to your point, Tim, 0:04:24.920 --> 0:04:27.520 that's down twelve percent year over year. There's no real 0:04:27.560 --> 0:04:30.000 business there. It's nine hundred and fifty five million dollars, 0:04:30.240 --> 0:04:32.400 which would not be an issue if this wasn't like, 0:04:32.440 --> 0:04:34.280 you know, a fifty eight billion dollar quarter com. 0:04:34.240 --> 0:04:36.400 Totally, this is an advertising company, yep, full stop. 0:04:36.480 --> 0:04:36.560 No. 0:04:36.920 --> 0:04:38.640 So when it comes, you know, to that pivot to 0:04:38.680 --> 0:04:42.000 the metaverse, remember earlier this month that Bloomberg reported that 0:04:42.320 --> 0:04:45.720 Meta is beginning job cuts basically in Reality Labs as 0:04:45.760 --> 0:04:48.960 it shifts from the metaverse to its AI devices. So, yes, 0:04:49.040 --> 0:04:51.960 Zuckerberg tends to go all in, but that doesn't mean 0:04:52.000 --> 0:04:54.600 also that he doesn't occasionally shift away as well. 0:04:54.680 --> 0:04:56.320 All right, I want to go back to Microsoft because 0:04:56.320 --> 0:05:00.040 it's down about seven percent here in the aftermarket this 0:05:00.240 --> 0:05:03.360 after the company. Again, CAPEX is something we're talking about 0:05:03.800 --> 0:05:06.880 a lot for these companies, but also Azure always important 0:05:06.880 --> 0:05:09.440 for this company. Second quarter Azure another cloud revenue X 0:05:09.880 --> 0:05:10.840 currency up. 0:05:10.760 --> 0:05:13.240 Thirty eight percent. That's what the street was expecting. 0:05:13.600 --> 0:05:15.240 And I think it's safe to say with the spend 0:05:15.279 --> 0:05:17.480 that we continue to see with these companies, people are 0:05:17.480 --> 0:05:20.120 looking for even better numbers when it comes to that. 0:05:20.960 --> 0:05:23.440 Yeah, actually, guys, let's go up the Tesla here. These 0:05:23.480 --> 0:05:26.520 numbers starting to trickle out right now. The EPs numbers 0:05:26.520 --> 0:05:28.240 coming in right now at fifty cents a share. 0:05:28.240 --> 0:05:29.200 That does look like a beat. 0:05:29.560 --> 0:05:32.400 The street was looking on average for about forty five cents. 0:05:32.480 --> 0:05:34.000 That's all the numbers we have right now. It's going 0:05:34.040 --> 0:05:34.359 to take a. 0:05:34.320 --> 0:05:36.159 While to pass through the Tesla released because of course 0:05:36.160 --> 0:05:39.480 they don't follow normal formatting for anything here, but those 0:05:39.480 --> 0:05:42.400 shares slightly lower in the after hours Train one percent down. 0:05:42.520 --> 0:05:44.520 Yeah, absolutely, it's going to be interesting to get some 0:05:44.600 --> 0:05:47.039 of these figures here. It is interesting to see that 0:05:47.120 --> 0:05:50.120 price targets from the seal side have been rising even 0:05:50.160 --> 0:05:53.840 as Tesla's profit outlook really in question. You can see 0:05:53.839 --> 0:05:56.880 shares now down about one percent here as we start 0:05:56.880 --> 0:05:58.040 to get some more of these numbers. 0:05:58.040 --> 0:06:01.080 Ten okay, fourth quarter grows margin d point one percent, 0:06:01.120 --> 0:06:03.960 that beat estimates of seventeen point one percent. Fourth quarter 0:06:04.040 --> 0:06:07.120 operating income coming in above estimates at one point four 0:06:07.120 --> 0:06:10.279 to one billion dollars. Fourth quarter revenue coming in just 0:06:10.400 --> 0:06:13.240 shy of twenty five billion dollars at twenty four point 0:06:13.320 --> 0:06:15.760 nine billion dollars, that was just below estimates. Fourth Quarter 0:06:16.080 --> 0:06:19.599 earnings per share coming in at twenty four cents versus 0:06:19.640 --> 0:06:22.159 sixty six cents. That's year over year, so that was 0:06:22.200 --> 0:06:25.760 not an estimate, but twenty four cents for fourth quarter EPs, 0:06:26.240 --> 0:06:28.320 fourth quarter free cash flow one point four to two 0:06:28.480 --> 0:06:31.520 billion dollars. The estimate there was for one point five 0:06:31.520 --> 0:06:32.680 to nine billion dollars. 0:06:32.760 --> 0:06:34.520 I mean to be fair, and just listening to some 0:06:34.600 --> 0:06:37.160 of our team talk about from the Bloomberg Intelligence team, 0:06:38.040 --> 0:06:39.920 you know what you want to hear from Tesla. There's 0:06:39.920 --> 0:06:42.760 a lot of folks want to hear about self driving cars, 0:06:42.880 --> 0:06:46.000 autonomous cars, the taxi, and they also want to hear 0:06:46.000 --> 0:06:48.240 about robotics because that is seen as the future of 0:06:48.240 --> 0:06:48.800 this company. 0:06:48.880 --> 0:06:51.040 Yeah, free cash flow in the quarter for Tesla one 0:06:51.040 --> 0:06:53.440 point four to two billion, that's slightly below estimates. But 0:06:53.560 --> 0:06:55.080 I want to go back to Katie's point too, because 0:06:55.080 --> 0:06:56.760 I think she was referencing the great story that was 0:06:56.760 --> 0:06:59.960 on the Bloomberg terminal just about how insane this valuation 0:07:00.400 --> 0:07:02.560 and the idea that a lot of investors don't think 0:07:02.600 --> 0:07:05.040 it's insane. This isn't really a bet on cash flow 0:07:05.160 --> 0:07:05.960 or a profitability. 0:07:06.000 --> 0:07:07.640 He's not in the short term or cars. 0:07:07.760 --> 0:07:10.400 It's a bet on exactly tim It's bet on these 0:07:10.440 --> 0:07:14.160 moonshots that we know Elon Musk is great at at 0:07:14.240 --> 0:07:16.840 least advocating for. Whether he actually delivers on them, that's 0:07:16.840 --> 0:07:17.760 a whole another question. 0:07:17.960 --> 0:07:19.480 But he is the consummate salesman. 0:07:19.600 --> 0:07:22.440 He has focused our attention less on those cars, less 0:07:22.440 --> 0:07:24.760 on the cash generator from those cars, and more on 0:07:24.800 --> 0:07:26.880 whether Katie's going to have a humanoid robot to make 0:07:26.880 --> 0:07:28.120 her omelin in the morning. 0:07:27.880 --> 0:07:30.040 Which he did say last week at Davos she would 0:07:30.080 --> 0:07:31.080 have in the next year. 0:07:31.600 --> 0:07:33.960 Yeah, theoretically, I will say, to put it even more directly, 0:07:34.000 --> 0:07:37.240 I mean it's a bet on Elon Musk, specifically Elon 0:07:37.320 --> 0:07:40.840 Musk's ability to sort of engineer those moonshots. You think 0:07:40.840 --> 0:07:44.600 about the Musk premium in relation to Tesla's shares, We've 0:07:44.640 --> 0:07:46.880 never actually exactly found out what that is, but I 0:07:46.880 --> 0:07:49.000 mean you compare Tesla to some of the other car 0:07:49.040 --> 0:07:51.600 companies out there, It's in just a completely different league, 0:07:51.600 --> 0:07:53.000 and it has been for years now. 0:07:53.120 --> 0:07:56.240 Yeah, it's not even valued as an auto company. On 0:07:57.160 --> 0:08:01.160 that Investors valuing this report least the knee jerk reaction 0:08:01.320 --> 0:08:03.840 now higher by three point eight percent. Shares did initially 0:08:03.920 --> 0:08:06.840 drop on the release, but now shares are up for 0:08:06.960 --> 0:08:09.480 Tesla three point eight close to four percent. 0:08:09.560 --> 0:08:11.760 The company saying that it does plan to invest further 0:08:11.840 --> 0:08:15.200 in those autonomous robots and the infrastructure for that, also 0:08:15.200 --> 0:08:18.960 says that cybercab, the Semi and Mega Pac three that's 0:08:18.960 --> 0:08:21.960 still on schedule. Katie Greig Philip for twenty twenty six. 0:08:22.040 --> 0:08:24.480 So elon Musk once again laying out some of these 0:08:24.520 --> 0:08:26.960 long term looks here and saying that maybe at least 0:08:26.960 --> 0:08:28.400 this year we might start to see some of that 0:08:28.400 --> 0:08:29.280 stuff come online. 0:08:29.320 --> 0:08:31.240 Well, you can see that faith express right now in 0:08:31.280 --> 0:08:34.439 the after hours reaction. Let's quickly pivot here to international 0:08:34.480 --> 0:08:37.920 business machines IBM. The red headline here that fourth quarter 0:08:37.960 --> 0:08:41.400 revenue came in at nineteen point six y nine billion dollars, 0:08:41.440 --> 0:08:43.880 that is above the estimate of nineteen point two to 0:08:43.960 --> 0:08:47.480 one billion dollars. They see their full year cash flow 0:08:47.520 --> 0:08:50.360 increasing by about one billion dollars year over year. 0:08:50.400 --> 0:08:51.840 Their fourth quarter free cash. 0:08:51.720 --> 0:08:55.080 Flow came in at seven point five five billion dollars, 0:08:55.080 --> 0:08:57.520 that is above the estimate of about six point eight 0:08:57.640 --> 0:09:01.160 five billion dollars. IBM shares high by about two percent. 0:09:01.240 --> 0:09:03.920 Right now, All right, let's go back to Tesla again, 0:09:04.000 --> 0:09:09.720 getting some commentary about some of the future perhaps revenue drivers, 0:09:09.760 --> 0:09:11.640 and this is what investors are kind of banking on. 0:09:11.720 --> 0:09:14.719 But we are talking about remain mentioned this the cybercabs, 0:09:14.720 --> 0:09:17.880 Semi and Megapac three on schedule for twenty twenty six. 0:09:18.280 --> 0:09:21.439 That's this year Tesla to invest further in autonomous robots, 0:09:21.480 --> 0:09:25.400 infrastructure and ramping six new production lines across products. 0:09:25.440 --> 0:09:27.280 And so we're continuing to look now at. 0:09:27.120 --> 0:09:29.680 Tesla now up about three point four percent here in 0:09:29.720 --> 0:09:30.560 the aftermarket. 0:09:30.679 --> 0:09:32.840 You know, I'm going through some more numbers here coming 0:09:32.840 --> 0:09:35.600 out of Microsoft. Here we're talking about a company with 0:09:35.640 --> 0:09:38.319 eighty one billion dollars in revenue in the most recent 0:09:38.400 --> 0:09:41.280 quarter and operating income of about thirty eight billion. The 0:09:41.280 --> 0:09:43.960 company is saying though, of that income, at least on 0:09:43.960 --> 0:09:47.400 the net income basis, about seven point six billion dollars 0:09:47.400 --> 0:09:50.320 of that actually came from its investments, again, on its 0:09:50.320 --> 0:09:54.240 investments in open AI. I know, Katie Greifeld, you're always 0:09:54.240 --> 0:09:57.040 concerned about the oral boris here, this sort of circular 0:09:57.080 --> 0:09:59.160 thing here, but at least in the short term, maybe 0:09:59.200 --> 0:10:00.680 a little bit of a benefit fit all some of 0:10:00.720 --> 0:10:03.960 those investments here, so contributing to the company's bottom line. 0:10:04.040 --> 0:10:06.280 There you have it, all, right, Just to quick check, 0:10:07.240 --> 0:10:10.120 Meta Platforms up about three percent here in the aftermarket, 0:10:10.160 --> 0:10:12.680 Microsoft down about five point three percent, and then we've 0:10:12.679 --> 0:10:15.880 got Tesla, which has been bouncing around. That one is 0:10:16.080 --> 0:10:18.360 right now as I pull it up, up about three 0:10:18.360 --> 0:10:20.360 point six percent here in the aftermarket. So we'll be 0:10:20.360 --> 0:10:24.240 looking forward to those calls with the analyst and investment community. 0:10:25.200 --> 0:10:29.240 This Stock Movers report from Bloomberg Radio. Check back with 0:10:29.320 --> 0:10:31.880 us throughout the day for the latest roundup of companies 0:10:31.960 --> 0:10:35.080 making news on Wall Street and for the latest market 0:10:35.080 --> 0:10:39.080 moving headlines. Listen to Bloomberg Radio Live. Catch us on 0:10:39.120 --> 0:10:43.040 YouTube Bloomberg dot com and on Applecarplay and Android Auto 0:10:43.080 --> 0:10:44.720 with the Bloomberg Business App.