Tech Earnings Calls – How Are Microsoft, Meta, and Tesla Faring After DeepSeek Shock?

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Microsoft, Meta, and Tesla held their earnings calls this week, with Apple’s scheduled for today, to publicly disclose their quarterly financial results. This comes just days after the Chinese AI company DeepSeek made headlines with its advanced AI model, reportedly rivalling US counterparts at a fraction of the cost. The development triggered a sell-off in AI-related stocks, wiping approximately $600 billion from Nvidia’s market capitalisation.

Investor concerns over the return on massive AI investments have been growing. Microsoft, Meta, and Tesla have all spent billions on AI infrastructure, and their earnings calls focused significantly on future AI spending. Here’s a recap of their latest performance and outlook.

Microsoft
Microsoft’s fiscal Q2 2024 earnings beat analyst expectations, reporting earnings per share of $3.23 (versus $3.11 expected) and revenue of $69.6 billion. The company disclosed that its AI business now generates $13 billion annually, reflecting 175 percent year-over-year (YoY) growth. Microsoft also announced plans to invest $80 billion in AI infrastructure this year.

Despite the strong financial results, Microsoft’s stock fell 6.2 percent, partly due to Azure cloud revenue missing market expectations.

The earnings call took place amid reports that Microsoft and OpenAI are investigating whether DeepSeek used unauthorised data to develop its AI models. However, CEO Satya Nadella downplayed concerns about DeepSeek’s impact, stating: “For a hyperscaler like us and a PC platform provider like us, this is all good news as far as I’m concerned. DeepSeek has some real innovations.”

While Microsoft continues to dominate the enterprise AI space, investor sentiment remains cautious due to increasing competition and infrastructure costs.

Meta
Meta’s Q4 2023 earnings led to a 5 percent stock increase. Despite the broader AI stock sell-off triggered by DeepSeek’s disruptive AI breakthrough, Meta largely avoided major declines, gaining 1.9 percent on Monday, 2.2 percent on Tuesday, and 0.3 percent on Wednesday.

However, the company’s Q1 2024 revenue forecast came in below analyst expectations, raising concerns about its near-term growth trajectory.Meta raised its capital expenditure forecast to $60 billion–$65 billion in 2025, up from the previously projected $50 billion, emphasising investment in AI, infrastructure, and its core business rather than its metaverse ambitions.

CEO Mark Zuckerberg directly addressed DeepSeek’s impact, saying: “There’s going to be an open-source standard globally. And I think for our national advantage, it’s important that it’s an American standard.”

Looking ahead, Zuckerberg outlined Meta’s AI ambitions: “I expect that this is going 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.”

Tesla
Tesla’s Q4 2023 earnings missed expectations, reporting earnings per share of $0.73 (versus $0.75 expected) and revenue of $25.7 billion (versus $27.2 billion expected).

Despite the earnings miss, Tesla’s stock rose over 3 percent after-hours, driven by CEO Elon Musk’s announcement that paid, unsupervised full-self-driving (FSD) ‘robotaxi’ rides will launch in Austin in June, with expansion planned for California by year-end and across North America in 2026.

While vehicle sales declined YoY in 2024, Tesla expects a return to growth in 2025, citing improvements in autonomous driving, production scaling, and macroeconomic conditions.

Musk also commented on Tesla’s AI capabilities: “There is no company in the world as good at real-world AI as Tesla. I don’t even know who second place is… I would need a very big telescope to see them, that’s how far behind they are.”

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