Instant Reaction: Microsoft, Meta Shares Slip After Earnings

Oct 29, 2025

Anurag Rana, Senior Technology Analyst at Bloomberg Intelligence, and Ivan Feinseth, Research Director and Chief Investment Officer at Tigress Financial Partners, dive into the latest earnings reports of tech giants Microsoft and Meta. They discuss Microsoft’s soaring capital expenditures amid AI investments, despite a strong revenue beat. Ivan explains the significant tax charge impacting Meta’s net income and the company’s ambitious AI monetization. Both experts share insights on the future of cloud services and emphasize the ongoing opportunity in AI spending.

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INSIGHT

CapEx Spike Reflects AI Capacity Buildout

Microsoft reported strong revenue and Azure growth but investors focused on higher-than-expected capital spending.
Anurag Rana views higher CapEx as needed capacity expansion to meet AI demand rather than a mistake.

INSIGHT

Azure Growth Is Impressive Given Scale

Azure grew 39% adjusted for currency, beating the 37% consensus and showing robust scale.
Analysts note Azure's large revenue base makes sustaining that percentage growth more impressive.

ADVICE

Watch Multi-Cloud Adoption After Outages

Companies will likely adopt multi-cloud strategies after outages, creating backup-provider demand.
Investors should watch multi-cloud adoption as a longer-term growth driver for all cloud providers.

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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. Microsoft continues “to increase our investments in AI across both capital and talent to meet the massive opportunity ahead,” Chief Executive Officer Satya Nadella said in a statement. Total revenue increased 18% to $77.7 billion in the fiscal first quarter, while profit was $3.72 a share. Analysts on average estimated sales of $75.6 billion and per-share earnings of $3.68. The Azure cloud-computing unit posted a 39% revenue gain in the quarter when adjusting for currency fluctuations, beating the Wall Street estimate of 37%. Investor expectations for Microsoft were high heading into earnings, with all but one analyst tracked by Bloomberg rating the stock a buy.

Meta Platforms said it expects total expenses to significantly increase in 2026, and will continue to invest at historic levels in artificial intelligence. 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.
Looking beyond the third-quarter, the company said it expects a “significant reduction” in US federal cash tax payments for 2025 and years to come due to the new law. Meta reported third-quarter sales of $51.2 billion, which beat analysts’ average estimate of $49.6 billion.

For analysis of the tech earnings, Bloomberg Businessweek Daily spoke with Bloomberg Intelligence Senior Technology Analyst Anurag Rana and Ivan Feinseth, Research Director and Chief Investment Officer with Tigress Financial Partners.

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