Microsoft shares drop 5%, Meta up 2% after Q1 results, both companies post profit | Stock Market News

Q1 results: Tech giant Microsoft’s shares dropped 5 per cent, while fellow Silicon Valley stock Meta was up 2 per cent after their October-December Q1 results, according to AP reports. Both companies posted profits, it added.

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 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 Q1 Results?

Q1 net income was at $24.1 billion, or $3.23 per share, beating Wall Street expectations of $3.11 per share. The Washington-based software giant posted revenue of $69.6 billion in Q1, up 12 per cent from the previous year, also beating expectations.

The cloud computing business, including Azure, jumped 19 per cent year-on-year to $25.5 billion, but missed FactSet analysts’ projection of $25.83 billion, as per the report.

The productivity business unit, which includes Office, Outlook and other workplace offerings, grew 14% to $29.4 billion.

Its personal computing business, led by its Windows division, remained steady at $14.7 billion, with a drop in consumer device sales offset by growth in advertising revenue tied to the Bing search engine.

Microsoft Shares Down 3%

Microsoft shares dropped 5 per cent in after-hours trading Wednesday (January 29) but were still higher than Monday(January 27) , when the tech giant was hit by a broader tech stock sale caused by a frenzy over the new ChatGPT competitor developed by Chinese tech startup DeepSeek.

Microsoft is a close partner of ChatGPT maker OpenAI and also sells its own AI chatbot services, branded as Copilot. Part of what drove the Wall Street panic this week was concern over the startup’s claims that it was catching up to US tech titans on a fraction of their budget.

Microsoft CEO Satya Nadella downplayed those concerns on an investor call Wednesday, saying “DeepSeek had some real innovations” and 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

Meta Platforms Inc. posted sharply higher profit and revenue for its fourth quarter on Wednesday, thanks to higher ad revenue on its social media properties, sending its shares up in after-hours trading even as it forecast increasing expenses on its artificial intelligence efforts.

CEO Mark Zuckerberg said he expects 2025 to “be the year when a highly intelligent and personalized AI assistant reaches more than 1 billion people, and I expect Meta AI to be that leading AI assistant.”

The Menlo Park, California-based company earned $20.83 billion, or $8.02 per share, in the October-December quarter. That’s up 49% from $14.02 billion, or $5.33 per share, in the same period a year earlier.

Revenue grew 21% to $48.39 billion from $40.11 billion.

Analysts, on average, were expecting earnings of $6.76 per share on revenue of $47 billion, according to a poll by FactSet.

“We continue to make good progress on AI, glasses, and the future of social media,” Zuckerberg said in a statement.

For the current quarter, Meta said expects revenue of $39.5 billion to $41.8 billion. Analysts are expecting revenue at the high end of that range — $41.68 billion.

The company also said it expects expenses in the range of $114 billion to $119 billion, driven by infrastructure costs and employee compensation. Meta had 74,067 employees as of Dec. 31, up 10% from a year earlier.

“Meta’s Q4 performance underscores the company’s resilience in a still-uncertain digital ad market. By beating both earnings and revenue estimates, they’ve demonstrated that cost discipline and efficiency gains are paying dividends,” said Jesse Cohen, an analyst with Investing.com. “However, the real headline is their commitment to aggressive capital expenditures. This signals Meta is doubling down on its AI infrastructure and metaverse ambitions, even as investors grapple with the costs.”

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 Jan. 6, 2021, attack on the U.S. Capitol.

“This is also going to be a big year for redefining our relationship with governments,” Zuckerberg said in a conference call with analysts. “We now have a U.S. administration that is proud of our leading companies, prioritizes American technology winning, and that will defend our values and interests abroad. And I’m optimistic about the progress and innovation this is going to unlock.”

Meta’s stock rose $13.53, or 2%, to $690.02 in after-hours trading.