"Magnificent Seven" Companies Microsoft, Amazon, Alphabet, and Meta Just Reported Earnings. Here Are the Winners and Losers
Four 'Magnificent Seven' companies reported earnings after the market closed on April 29, resulting in a busy night for investors. The Dow Jones Industrial Average rose by over 700 points, while the Nasdaq Composite saw marginal gains. The four companies—Microsoft, Amazon, Alphabet (Google), and Meta Platforms—reported the following results:
- **Microsoft**: Adjusted EPS of $4.27 (beating estimates by $0.21), revenue of $82.89 billion (beating estimates by $1.5 billion).
- **Amazon**: EPS of $2.78 (beating estimates by $1.10), revenue of $181.5 billion (beating estimates by over $4 billion).
- **Alphabet**: Adjusted EPS of $2.62 (missing estimates by a penny), revenue of nearly $110 billion (beating estimates by $2.7 billion).
- **Meta**: Adjusted EPS of $7.31 (beating estimates by $0.52), revenue of roughly $56.3 billion (beating estimates by $860 million).
Market reactions varied: Alphabet’s stock rose nearly 8%, while Amazon, Microsoft, and Meta all declined. All four companies raised their capital expenditure (capex) guidance for the year, signaling continued investment in AI infrastructure. Cloud services saw significant growth:
- Microsoft’s Azure revenue surged 40% YoY.
- Amazon Web Services (AWS) reported 28% growth, exceeding estimates by 2%.
- Google Cloud revenue grew 63% YoY, ahead of Wall Street’s 47% estimate, with a backlog nearly doubling to $460 billion.
Despite positive cloud growth, AI capex investments are straining free cash flow (FCF). Amazon’s FCF dropped to $1.2 billion from $26 billion a year earlier, while Meta’s FCF increased by $2 billion but was still impacted by capex. Meta also reported a 20 million decline in users due to internet disruptions in Iran and Russia, along with potential lawsuits affecting youth safety.
Market sentiment shifted toward stricter earnings expectations. Alphabet’s cloud dominance (18% of revenue) and custom chips contributed to its success, while Meta’s capex-driven growth faced scrutiny. Microsoft’s Azure growth and Copilot seat increases (5 million in the quarter) were highlighted as strong, though not ChatGPT-like. The company guided for 39%–40% Azure revenue growth in the current quarter. Meta raised its full-year capex guidance but expects second-quarter revenue to align with estimates.
Source: The Motley Fool