31.07.25 - Boost for Tech by earnings

Microsoft delivered a strong fiscal first quarter with revenue of USD 76.4 billion and EPS of USD 3.65, both beating expectations. The company also unveiled bold capex plans of around USD 100 billion for AI and datacenter expansion across 2025–2026.
Shares surged over 9% in after-hours trading, pushing Microsoft’s market cap above USD 4 trillion.

Meta also outperformed in Q2, reporting USD 47.52 billion in revenue (+22% YoY) and EPS of USD 7.14, well above forecasts. The company raised its full-year outlook and guided Q3 revenue to USD 47.5–50.5 billion, topping the USD 46.14 billion estimate. Meta also increased the lower bound of its capex guidance to USD 66 billion.
The stock jumped 12% in extended trading hours.

Markets: Nasdaq futures hit new record highs, up +1.4%

My View: Just some hours after the hawkish Fed tone, the momentum-driven tech rally gained new fuel from Microsoft and Meta’s strong earnings, reinforcing investor enthusiasm around AI and cloud. While growth remains impressive, the durability of this momentum will depend on capital discipline, continued cloud adoption, and broader macro conditions.

Markets are cheering the massive wave of AI-driven capex, echoing the early e-commerce boom. But this time, it's established, cash-rich companies with resilient business models, not speculative newcomers. Still, these massive investments must ultimately translate into meaningful returns to justify the scale of spending.

Such sharp post-earnings gains, especially following an already extended rally, are often short-lived.

Disclosure: Short position on Meta

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