MAG-7 earnings: Microsoft shares drop 5%, Meta up 2% after quarter results, both companies post profit

Tech giant Microsoft's shares dropped 5 per cent, while Silicon Valley stock Meta was up 2 per cent after their October-December quarter results, according to AP reports. Both companies posted profits, it added.

Both Microsoft and Meta are part of the ‘MAG-7’ or ‘Magnificent 7’ tech stocks in US markets, along with Tesla, Nvidia, Google and Apple.

Microsoft Grew 10 per cent

On January 29, Microsoft said it grew 10 per cent in the October-December quarter amid moves to capitalise on its big artificial intelligence (AI) spends, the AP reported.

Overall, its Q2 profits and revenue beat Wall Street expectations, but missed projections for its cloud computing business, including Azure — which is at the core of Microsoft's AI ambitions, the report added.

What were Microsoft's Q2 Results?

Q2 net income was at $24.1 billion, or $3.23 per share, beating Wall Street expectations of $3.11 per share. Revenue was also up 12 per cent year-on-year (YoY) to $69.6 billion (also beating expectations).

• The cloud computing business, including Azure, jumped 19 per cent YoY to $25.5 billion, but missed FactSet analysts' projection of $25.83 billion, as per the report.
• Productivity business unit, which includes Office, Outlook and other workplace offerings, grew 14 per cent YoY to $29.4 billion.
• Personal computing business, including Windows and Bing Search, was steady at $14.7 billion, with gains in advertising but fall in consumer device sales.

Microsoft Shares Down 5%

Microsoft shares dropped 5 per cent in after-hours trading on January 29, but were still higher than Monday (January 27), as per AP. The boarder tech stocks were impacted by Chinese start-up DeepSeek's cost effective AI chatbot. Microsoft holds stake in ChatGPT-maker OpenAI and has its own AI service called Copilot.

Microsoft CEO Satya Nadella downplayed those concerns on an investor call, acknowledging that “DeepSeek had some real innovations” but played it off as better for all, adding that it is good to have efficiency gains and lower prices in AI development because it “means people can consume more and there’ll be more apps written.”

Meta Posts Sharp Profit

Mark Zuckerberg-led Meta Platforms Inc. posted sharply higher profit and revenue in Q4 thanks to higher ad revenue from its social media platforms — Facebook and Instagram, and despite increased expenses on AI.

Zuckerberg was gung-ho about AI, expecting 2025 to “be the year when a highly intelligent and personalised AI assistant reaches more than 1 billion people, and I expect Meta AI to be that leading AI assistant.”

Meta Quarterly Earnings Report

• Meta earned $20.83 billion, or $8.02 per share, in the October-December quarter — up 49 per cent YoY from $14.02 billion, or $5.33 per share, as per the report. This is above analysts expectations of $6.76 per share.
• Revenue grew 21 per cent YoY to $48.39 billion from $40.11 billion — also above analysts' expectation of $47 billion. Meta said it expects revenue of $39.5-41.8 billion for the current quarter, against analysts expectation of $41.68 billion, the report said.
• Meta also expects expenses in the range of $114-$119 billion due to employee compensation and infrastructure costs. Till December-end, Meta had 74,067 employees — up 10 per cent YoY, it added.

Meta Agrees to $25 Million Settlement in Trump Suit

Separately, Meta has agreed to pay roughly $25 million to settle a 2021 lawsuit that President Donald Trump brought against the company and Zuckerberg after Trump's accounts were suspended following the January 6, 2021, attack on the US Capitol.

Meta's stock rose $13.53, or 2 per cent, to $690.02 in after-hours trading.

(With inputs from AP)