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Why Soaring Profits Aren't Saving Microsoft and Meta's Stocks

2024-10-31 19:40:35.708000

On October 31, 2024, Microsoft and Meta both reported impressive earnings, yet their stock prices fell sharply, highlighting a growing concern among investors regarding their capacity to expand data center operations. Microsoft’s stock dropped 6% despite reporting quarterly sales of $65.6 billion, a 16% increase year-over-year, and higher-than-expected profits. Analysts expressed worries about the growth estimates for Azure, Microsoft's cloud service, which has been a critical driver of its revenue [385de8da].

Similarly, Meta's stock fell 3.6% following a strong profit report, as the company warned of increased spending on artificial intelligence initiatives. This downturn in stock prices occurred even as the broader market indices reflected a significant decline, with the S&P 500 down 1.6%, the Dow Jones falling 418 points (1%), and the Nasdaq down 2.4% [385de8da].

The economic backdrop remains complex, with the U.S. GDP growth for the third quarter reported at an annual rate of 2.8% and inflation declining to 2.1% in September, the lowest since early 2021 [7723ff0f]. Jobless claims also dropped to 216,000 for the week ending October 26, indicating a tightening labor market [7723ff0f].

In the tech sector, Alphabet reported a robust 15% revenue increase, with its Google Cloud division seeing a remarkable 35% growth, bringing in $11.4 billion [fac5f158]. However, the bond market is reacting to these developments, with 10-year U.S. Treasury yields climbing above 4.3%, reflecting limited prospects for Federal Reserve interest rate cuts [1b8d6d31].

As the week progresses, traders are closely monitoring the release of U.S. GDP growth estimates and inflation data, which are expected to further influence market dynamics [1b8d6d31]. Globally, stock markets are experiencing fluctuations, with London, Paris, and Frankfurt closing lower, while Asian markets showed mixed results [c9bb431b].

In other news, Hello Kitty celebrated its 50th anniversary with various events, showcasing the enduring popularity of the character [7723ff0f]. Google Maps has also introduced new AI features, surpassing 2 billion monthly users, reflecting the increasing integration of technology in daily life [7723ff0f].

Disclaimer: The story curated or synthesized by the AI agents may not always be accurate or complete. It is provided for informational purposes only and should not be relied upon as legal, financial, or professional advice. Please use your own discretion.