5 big earnings hits: Meta delights, Microsoft warns in huge week for tech, AI

Here is your Pro Recap of the biggest earnings reports you may have missed this week and what Wall Street analysts have to say: Numbers out of Meta, Alphabet, Microsoft, Boeing, and McDonald’s.

InvestingPro subscribers got this news in rapid fire. Never be left in the dust again.

Meta
Meta (NASDAQ:META) popped 4.4% Thursday after the company said it pocketed $2.98 per share in the second quarter – $0.07 better than the Street had anticipated – on above-par revenue of $32 billion, driven by a 12% year-over-year jump in advertising revenue.

The Facebook operator also projected Q3 revenue of $32B to $34.5B, exceeding the $31.2B consensus.

Daily active users (DAUs) on Facebook rose 5% to 2.06B, while monthly active people (MAUs) climbed 3% to 3.03B.

Morgan Stanley was ebullient on the results, hiking Meta’s price target by $25 to $375 per share and writing:

META’s AI investments continue to drive higher engagement, advertiser return, platform monetization and EPS. And the product pipeline is flush with a September AI event catalyst.

Bernstein raved:

They’ve simply done everything right: revenue and [free cash flow] growth keep surpassing even the most ambitious expectations, and they continue to build for the future… which is what we always wanted our Internet companies to do.

UBS raised its price target by $65 to $400, citing September’s Meta Connect virtual reality conference as a “likely positive catalyst” and citing new generative artificial intelligence (AI) announcements pointing to “the next leg to the bull case.” BofA similarly believes the company’s “growing AI capabilities” could drive its multiple higher.

Alphabet
Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) shares jumped after the search giant surpassed second-quarter analyst expectations, saying Tuesday after the close that it earned $1.44 per share on a top line of $74.6B, driven by advertising growth and robust performance in its cloud business.

Analysts polled by Investing.com anticipated EPS of $1.34 on revenue of $72.82B.

Google Advertising climbed 3.2%, to $44.68B, with Google Search & other rising 4.8% to $40.69B; Google Cloud was up 28%, to $8.03B, ahead of analyst estimates of $7.87B.

After the results, research firm Bernstein highlighted the Search beat and “solid progress” on the AI front, saying: “A clean quarter. Balanced risk/reward from here for a company steadily improving top-line while all-in on an expensive AI endeavor.”

Goldman Sachs hiked the price target by $12 to $152 per share on Buy-rated GOOGL stock, writing:

While some questions remain around AI’s impact on core products or cost structure, we continue to see Alphabet as a leader that is well positioned to capitalize on a consumer/enterprise computing shift across multiple platforms/products.

Shares jumped 5.8% on Wednesday.

Microsoft
Microsoft (NASDAQ:MSFT) beat on earnings for the second quarter, but shares lost ground Wednesday after reporting the company’s CFO warned on the earnings call that CapEx is expected to increase over the next several quarters as the tech giant races to meet strong AI demand.

“For FY ’24, the impact will be weighted toward H2. To support our Microsoft Cloud growth and demand for our AI platform, we will accelerate investment in our cloud infrastructure,” CFO Amy Hood noted on the earnings call.

For the Q2, Microsoft announced EPS of $2.69, better than the $2.55 consensus, on revenue of $56.2B vs. expectations of $55.44B.

“Organizations are asking not only how – but how fast – they can apply this next generation of AI to address the biggest opportunities and challenges they face – safely and responsibly,” said Satya Nadella, chairman and chief executive officer of Microsoft.

Bank of America says the expensive AI investment cycle is “justified given opportunity,” adding that it views the results “as validation that Microsoft is ahead of the curve in AI. AI-enabled offerings across Azure and Office are likely to driving meaningful uplift to revenue and operating income at scale.”

Goldman Sachs believes the near-term debate will center on the timing of when these stepped-up investments will pay off:

Microsoft has a strong track record of proving that its capex acceleration is owed to increased business confidence. …Furthermore, Microsoft is poised to deliver double-digit revenue and earnings growth despite a step-up in CapEx and ~200bps of GM decline in FY24.

Shares closed down 3.7% on Wednesday and lost another 2% to $330.72 in the next session.

Boeing
Boeing (NYSE:BA) numbers topped second-quarter estimates as the U.S. plane maker also outlined plans to increase production of its popular 737 MAX narrowbody jet.

The company posted a loss of $0.82 per share on Wednesday, but that was $0.08 narrower than expected, and revenue of $19.75B – up 18% year over year – comfortably exceeded the $18.49B consensus, per analysts polled by Investing.com. Sales were driven by higher deliveries of its 787 model, and Boeing’s commercial airplanes segment registered a 41% revenue surge to $8.84B.

Boeing also raised its production plans for the 737 MAX up to 38 per month from 31 by the end of the year, in a sign that the planes are in heavy demand as airlines race to address a post-pandemic surge in travel.

BofA upgraded Boeing to Buy from Neutral on these results and raised its price target by $75 to $300, arguing that the “worst is behind” for the company “in the midst of the post-COVID commercial recovery with passenger demand emerging back to pre-pandemic levels.”

The analyst added:

We believe that demand is strong enough for Boeing to grow further, even if it were to only maintain its ~40% share of the narrowbody market. Additionally, we believe the 787 will remain the widebody of choice, holding onto the lion’s share of the widebody market vs. its competitors. We also expect there to be ample demand for 10 787s/month through the outyears,” the analyst said in a note.

Boeing soared 8.7% to $232.80 Wednesday and was recently adding more than 1% in premarket trading Thursday.

McDonald’s
McDonald’s (NYSE:MCD) shares rose 1.2% to $295.19 Thursday after the fast food behemoth beat on the top and bottom line in the second quarter on strong same-store sales.

EPS surged 97% to $3.15, said the company, trouncing the $2.78 average analyst estimate. Revenues rose 14% in constant currencies to $6.5B, edging out the $6.29B consensus.

The company reported that global comparable sales rose 11.7% for the quarter, far better than Wall Street’s call for an 8.88% increase. U.S. comparable sales rose 10.3%.

U.S. sales were boosted by strategic menu price increases and positive guest counts, the company said.

“Our second quarter results reflect consistently strong execution of our Accelerating the Arches strategy,” CEO Chris Kempczinski was quoted as saying in the accompanying press release. “While global macroeconomic challenges persist, we continue to invest in our growth drivers and our brand.”

Yasin Ebrahim, Senad Karaahmetovic, Scott Kanowsky, and Sarina Isaacs contributed to this report.