Highlights of META, Microsoft, and Google's financial reports

Three months ago, we successfully predicted that the META financial report would skyrocket. This time, of course, we continued to make predictions for everyone. The reason we had confidence in the last financial report was because we discovered a key factor:

It is the Chinese e-commerce giants, Shein and the overseas version of Pinduoduo, Temu, which have spent billions on advertising on Meta, allowing Meta to make a lot of money. Meta's stock price soared 15% after hours.

In today's video, we will analyze the financial reports of the three tech giants Meta, Microsoft, and Google. We will start by analyzing Microsoft's financial report, as Meta and Google are both advertising companies, and it is more appropriate to analyze them together. The intense competition between these two companies in advertising revenue, user growth, and innovative technology will be the focus of our analysis. For investors focusing on AI and tech stocks, the performance of these companies goes far beyond the numbers, and their financial results may become the determining factor in changing market sentiment.

01 Microsoft: Empowering AI, Winning in the Cloud, and a New Chapter in Gaming!

Microsoft's performance in the past four quarters has consistently exceeded analysts' expectations, demonstrating its strong capabilities in software.

In this financial report, Microsoft's AI initiatives are particularly noteworthy, especially the performance of the AI Copilot software. As a result of Microsoft's collaboration with OpenAI, AI Copilot integrates advanced generative AI technology, significantly improving the user efficiency and experience of Microsoft 365 and other product lines, greatly enhancing user satisfaction. This not only increases personal and enterprise productivity, but also consolidates Microsoft's leading position in the enterprise software market.

The successful promotion of AI Copilot is a milestone in Microsoft's AI strategy, especially in strengthening the market competitiveness of the Azure cloud platform. The integration of this technology has driven the optimization of Microsoft's services and opened up new business opportunities, demonstrating Microsoft's potential to expand its influence in global technology competition.

Microsoft's collaboration with OpenAI is driving technological innovation forward, especially in the construction of a new data center worth up to $100 billion and the development of a supercomputer named "Stargate." These initiatives not only enhance Microsoft's competitiveness in data processing capabilities, but also accelerate its technological progress in the field of artificial intelligence, ensuring its leadership in the global AI competition.

With the upcoming release of the more advanced GPT-5 version, Microsoft plans to integrate this cutting-edge technology into its extensive product line to enhance its technological advantage in the market. Especially when facing competitors like Anthropic, these innovative features will help Microsoft maintain its leading position.

Microsoft recently appointed heavyweight figure in the AI industry, Mustafa Suleyman, as the head of its AI department, further demonstrating the company's commitment to strengthening its internal AI research and development capabilities. These actions show that Microsoft is not only pursuing technological innovation but also actively building an AI strategic framework positioned for the next few decades.

This concentrated investment and strategic deployment reflect Microsoft's vision for the future of AI technology. With the forecast that the AI market will reach a scale of $13 trillion by 2030, and an expected compound annual growth rate of 37%, these measures by Microsoft are particularly important. Not only do they strengthen Microsoft's position as a leader in technological innovation, but they also signify the firm and determined steps the company is taking in the global AI competition.

In addition, another point worth noting is the Azure cloud business. Azure cloud business is a key driver of Microsoft's growth, and its performance is crucial to the company's overall performance. Azure is not only an important source of revenue for Microsoft, but also the core of its global strategy. To meet the growing global demand for data, Microsoft continues to expand its global data center network, improve service availability and response speed, thereby strengthening its competitiveness in the global market.

In terms of technological innovation, Azure continuously enhances its platform's competitiveness and supports users' digital transformation by integrating advanced technologies and features such as artificial intelligence, machine learning, and the Internet of Things (IoT).

As of the end of 2023, although Azure's global cloud infrastructure market share is 24%, second only to Amazon Web Services, its rapid market share growth indicates that Microsoft is expected to surpass the industry leader. Microsoft's competitiveness also benefits from its flexible pricing strategy and excellent customer service.

In the last quarter, Azure achieved a staggering 30% year-on-year growth at a fixed exchange rate, surpassing its competitors Amazon AWS and Google Cloud. The rise of AI services contributed to a 6% growth for Azure, and the market is now focused on whether this momentum can continue. In addition to AI, Microsoft recently completed the acquisition of Activision Blizzard, a renowned video game company known for popular games such as "World of Warcraft," "Candy Crush," and "Call of Duty." This acquisition, valued at $68.7 billion, is Microsoft's largest to date and will further support the company's gaming business, anchored by the well-known Xbox.

According to the big data of the US stock market StockWe.com, institutional traders bought $79 million worth of in-the-money call options last Friday when the stock market experienced a sharp decline. This strategy is similar to buying the underlying stock of MSFT but requires less capital. Several other longer-term call options for 2026 are neutral, making it difficult to determine whether they are buying or selling calls. However, the next option for $21 million is a buy call, indicating a bullish outlook.

According to the general expectations of Wall Street analysts, this financial report will reach $60.88 billion, which is a slight decrease from the previous quarter's $62.02 billion, but shows the company's continued growth compared to the $52.86 billion in the same period last year. This revenue growth expectation reflects Microsoft's solid performance and growth potential in key business areas, especially in AI and cloud computing services.

In terms of earnings per share (EPS), the expected $2.83 is slightly lower than the previous quarter's $2.93, but higher than the $2.45 in the same period last year, indicating that Microsoft still maintains a good growth trend in profitability.

As for adjusted net profit, it is expected to be reported as $21.07 billion. Although this is slightly lower than the $21.87 billion in the previous quarter, it is a significant increase from the $18.3 billion in the third quarter of 2023. This indicator further proves Microsoft's business execution efficiency and profitability, demonstrating its strong resilience to challenges in the market.

02 Betting on AI, Meta Q1 financial report shows future growth potential

Meta will announce its first quarter financial report for 2024 after the market closes on Wednesday. Analysts generally hold an optimistic view of Meta's future, expecting its P/E ratio to climb to over 20 times, while predicting that revenue growth will remain steady at around 10%.

This is especially considering the significant structural adjustments the company made in 2023. Despite the "efficiency year" plan leading to a substantial reduction in workforce, Meta has built a solid long-term development platform for itself by focusing on investments in AI technology, including high-salary recruitment of top engineers and increased hardware investment. Although this has increased short-term costs, in the long run, this strategy is expected to strengthen the company's core competitiveness in the market.

From an income perspective, it is expected that Meta will show strong growth, with first-quarter revenue expected to reach $36.1 billion, a year-on-year increase of 26%, indicating the strongest quarterly growth since the third quarter of 2021. In terms of earnings per share, the forecast indicates a potential doubling surge—from $2.20 in the same period last year to $4.29.

Under strict cost control over the past year, Meta's cost optimization measures, including personnel reductions and retention of vacant positions, are expected to save the company approximately $1.15 billion. It is expected to add approximately $30 billion in value for shareholders, while earnings per share are expected to increase by $0.45.

Under the dual impact of a strong rebound in the digital advertising market and internal cost control measures, Meta's net profit margin is also showing improvement. It is expected that the profit margin for this quarter will reach 31.1%, a significant increase compared to 19.9% in the same period last year, although slightly lower than the 35.0% in the fourth quarter of 2023. This change not only demonstrates Meta's operational efficiency optimization but also shows its adaptability and responsiveness in the face of market adversity.

Key Indicator: Growth in Advertising Revenue

In the upcoming Meta financial report, advertising revenue will undoubtedly once again become the focus of attention from all sides. Of particular note is the approaching 2024 U.S. presidential election, with political advertising spending expected to show a significant growth trend, bringing lucrative business opportunities for digital advertising platforms such as Meta.

The latest forecast released by the U.S. advertising consulting firm AdImpact shows that the 2024 U.S. presidential election cycle will be the most expensive in history, with all political advertising spending expected to reach $10.2 billion, an increase of 13% from the 2020 presidential election cycle and 292% from 2016. It is estimated that presidential election advertising will cost $2.7 billion, Senate election advertising will cost $2.1 billion, and House of Representatives election advertising will cost $1.7 billion. These massive political advertising expenditures will bring substantial revenue growth for platforms such as Meta.

Looking back at history, advertising has always been closely linked to politics. In each presidential election in the United States, advertising spending has shown a significant upward trend. With the popularization and development of digital media, the proportion of digital advertising in political advertising has also been increasing year by year. For digital advertising giants like Meta, the growth of political advertising will undoubtedly bring them huge commercial benefits.

In addition, Meta is constantly exploring new advertising monetization methods. Faced with competition pressure from platforms such as TikTok, Meta is actively launching new ad formats and services to meet the diverse needs of advertisers. These innovative measures are expected to bring new growth points to Meta's advertising revenue.

The latest developments in artificial intelligence plans

Meta continues to demonstrate its outstanding innovation capabilities in the field of artificial intelligence, achieving significant breakthroughs not only in software but also in independent hardware development.

On the software front, the recent release of the upgraded open-source AI model "Llama 3" by Meta is a strong testament to its leading technological position. This important upgrade significantly enhances the functionality of the MetaAI chat assistant, providing users with a better interactive experience. The open-source nature of Llama 3 allows for its wider application across different platforms and scenarios, further promoting the popularization and development of AI technology. In addition, Meta plans to integrate Llama 3 into platforms such as Facebook, Instagram, WhatsApp, and Ray-Ban smart glasses, providing users with more intelligent assistant functions.

In terms of hardware, the next-generation Meta Training and Inference Accelerator (MTIA) released by Meta represents an outstanding achievement in its independent hardware development. MTIA adopts the industry-leading 5nm process node, achieving significant improvements in memory and processing speed, while also making significant progress in cost control and reducing reliance on external suppliers. This technological breakthrough provides strong hardware support for Meta's next-generation generative AI products and services, further enhancing its position in the global technology competition.

Investors and market analysts are closely following Meta's progress in AI technology. They generally believe that the MTIA chip will enhance user experience, optimize content recommendations, and improve advertising efficiency in practical applications, thereby further enhancing Meta's advertising effectiveness and revenue performance. At the same time, the open-source nature and wide application of Llama 3 will also bring more business opportunities and partnerships to Meta.

It is worth mentioning that some hedge funds and institutional investors have already purchased new positions in Meta, with some even raising their price targets to $600.

Compared to other members of the "Big Seven," Meta's valuation is relatively low. If management announces another exciting financial report on Thursday and promises to achieve more in the field of AI, Meta is expected to experience a significant rebound. The quiet period before the Federal Reserve meeting has already begun. Therefore, despite Powell hinting at a possible delay in the June rate cut, Federal Reserve speakers will not disrupt the stock market until the two-day meeting ends on May 1st.

Google Q1 financial report: Cloud and AI drive growth, new dividend expectations

Alphabet, Google's parent company, plans to release its financial report this Thursday. Wall Street analysts predict that its first-quarter revenue will reach $78.79 billion, a 13% year-on-year increase, and net profit is expected to grow from $15.05 billion in the same period last year to $18.89 billion, a 26% increase. Earnings per share are expected to increase from $1.17 to $1.51. This growth is mainly attributed to the significant progress in Google's cloud business and AI technology.

Despite the slow growth of Google's cloud business in the past few quarters, it achieved a year-on-year growth of 25.7% in the fourth quarter of 2023, with revenue reaching $9.2 billion. This not only alleviated concerns about its growth stagnation in the market but also highlighted Google's competitiveness in the cloud computing market.

However, despite the revenue growth, the improvement in profit margin remains a focus for investors. Compared to other large tech companies, Google's performance in cost control seems less outstanding, which may affect the profitability of its cloud business.

In addition to the significant growth of cloud business, the advancement of AI technology is also a focus of investors' attention. As a giant in the technology industry, Google has made substantial progress in AI research and development through its significant investment. Particularly noteworthy is the recent launch of Google's new CPU "Google Axion" based on Arm architecture, aimed at improving the efficiency of cloud computing and reducing operational costs, further strengthening Google's competitiveness in the cloud market. In addition, with the rapid development of generative AI technology, Google is also actively exploring new business models and application scenarios to consolidate its leading position in the commercialization of AI.

In the field of search advertising, despite facing challenges from generative AI and competitors, Google has successfully maintained its leading position in profit in the search field relying on its outstanding technological strength and market share. At the same time, Google is exploring new revenue channels such as ad placement, independent subscription services, and enterprise licensing through tools like Gemini to adapt to market changes and demands.

In addition, many analysts expect Google to allocate another $70 billion for buybacks. We believe that a small dividend may be a way to further drive the stock higher, similar to Meta's move in February. Traditionally, dividends have been seen as the domain of more mature, slower-growing companies, but this policy is becoming increasingly popular among tech companies. In addition to Meta, Salesforce (CRM) and Booking (BKNG) have also started paying dividends in recent months. Among the six largest tech companies in the United States by market value, Google and Amazon are the only two that do not pay quarterly dividends.

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