Portfolio Implications from Earnings Week

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Meta Platforms Inc. said it expects total expenses to significantly increase in 2026, and the company will continue to spend at historic levels on data centers and other equipment to fuel its effort in artificial intelligence. The shares dropped in extended trading.
The company also reported third-quarter net income of $2.71 billion, which included a one-time, non-cash income tax charge of $15.9 billion due to the implementation of the tax bill signed into law in July, Meta said in the statement. Without the accounting charge, Meta said net income would have increased 19% to $18.6 billion.
Meta reported third-quarter sales of $51.2 billion, which beat analysts’ average estimate of $49.6 billion. The company has used profits from the advertising business to fuel its AI ambitions. While Meta has argued that its AI investments are paying off now by helping the company better target ads and content, a slowdown in ad sales could damp investor enthusiasm for Chief Executive Officer Mark Zuckerberg’s long-term vision for AI.
Meanwhile Microsoft Corp. reported a steeper climb in spending than Wall Street expected, fueling anxieties about the high costs of providing AI infrastructure.
First-quarter capital expenditures including leases, an indication of data center spending, came in at $34.9 billion, up from $24 billion in the preceding quarter, the company said Wednesday.
Alphabet Inc. reported quarterly sales that beat analysts’ estimates, buoyed by the performance of its cloud unit, which is surging as artificial intelligence startups seek Google’s support and computing power.
Third-quarter sales, excluding partner payouts, rose to $87.5 billion, Alphabet said in a statement Wednesday. That topped the $85.1 billion expected on average by analysts, according to data compiled by Bloomberg.
Net income was $2.87 per share, compared with Wall Street’s estimate of $2.26.The company is investing record amounts to try to push progress in AI, and infuse answers and assistance from its large language model, Gemini, into its popular products including search. The company said capital expenditures for the year will be $91 billion to $93 billion, up from the $85 billion earlier estimate.

Today's show features:

• Bloomberg Intelligence Senior Technology Analyst Anurag Rana on Microsoft earnings and Alphabet’s AI ambitions
• Ivan Feinseth, Research Director and Chief Investment Officer with Tigress Financial Partners, with reaction to Wednesday's big tech earnings
• Brooke May, Managing Partner at Evans May Wealth, breaks down Microsoft and Alphabet earnings
• Bloomberg News Senior Technology Reporter Kurt Wagner, on Meta’s latest earnings

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