Meta shares experienced a significant drop of more than 12% when trading commenced on Thursday, marking what could potentially be the company's most substantial single-day loss in years. This downturn follows the announcement of a nearly $16 billion tax charge, which has led to quarterly earnings falling well below the expectations set by Wall Street analysts.
In the tech sector, Microsoft shares fell by 2.2%, trading around $529.40 after the company released its quarterly earnings. Despite reporting better-than-expected results, Microsoft’s stock decline can be attributed to a $3.1 billion hit to net income due to its investment in OpenAI, resulting in a loss of $0.41 per share. The tech giant posted earnings per share of $4.13 and revenues reaching $77.6 billion, surpassing forecasts of $3.67 and $75.4 billion, according to FactSet. Notably, Microsoft also reported a remarkable 28% year-over-year increase in cloud revenue, totaling $30.9 billion.
In contrast, Alphabet saw its shares rise by 2.7% following its earnings report released on Wednesday. The tech behemoth's quarterly revenues exceeded $100 billion for the first time, reaching $102.3 billion and surpassing estimates of $99.9 billion. This positive performance stands in stark contrast to the challenges faced by other companies in the “Magnificent Seven” group.
Looking ahead, Apple and Amazon are set to report their earnings after the market closes on Thursday. Apple is projected to announce earnings per share of $1.78 along with revenues of $102.2 billion. Meanwhile, Amazon is expected to report earnings per share of $1.57 and total revenues of $177.9 billion. Additionally, Nvidia will be the last of the “Magnificent Seven” to disclose its quarterly earnings, with a report scheduled for November 19.
Despite Thursday's decline, Meta shares have shown resilience, rising 10% this year prior to the recent drop. The company has made substantial investments in recent years, particularly in artificial intelligence (AI), as organizations increasingly pivot to meet the growing demand for AI technologies. Earlier this year, Meta invested $14.3 billion in the AI startup Scale AI and appointed its CEO, Alexandr Wang, to spearhead Meta’s AI initiative, known as Superintelligence Labs. Furthermore, Meta has secured several cloud agreements recently, including a significant six-year, $10 billion partnership with Google established in August, aimed at bolstering its AI infrastructure.
As the tech landscape continues to evolve, investors are closely monitoring the performance of major players like Apple, Amazon, and Nvidia, especially in light of the recent volatility seen in Meta's stock. For more insights on market trends, explore articles on Forbes discussing Apple’s market value surpassing $4 trillion and Tesla's recent profit challenges.
