Investors Rattled as Meta and Microsoft Earnings Reports Signal AI Investment
Investors Rattled as Meta and Microsoft Earnings Reports Signal AI Investment
By:JJ Kinahan
Meanwhile, Amazon gains despite mixed revenue and Apple slips on iPhone forecast
- Meta and Microsoft’s increased AI spending raises concern among investors but signals long-term growth potential.
- Amazon and Apple report mixed earnings; Amazon rises on strong results but Apple declines on a weaker forecast.
- Economic reports show modest increase in inflation increase and weak job growth, with manufacturing hampered by Boeing strikeStocks took a hit yesterday after earnings reports from Meta Platforms (META) and Microsoft (MSFT) worried investors. The S&P 500 dropped 1.9%, the Nasdaq Composite lost 2.76% and the Russell 2000 fell 1.7%. The Dow Jones Industrial Average held up best, dipping just under 1%.
Yesterday's inflation update showed core personal consumption expenditures (PCE) prices rose 0.3% in October, in line with expectations, with a year-over-year increase of 2.7%, slightly above estimates.
Employment numbers, however, were weak, with only 12,000 jobs added, missing the 106,000 forecast, and unemployment holding at 4.1%.
The manufacturing sector saw notable job losses, likely because of a Boeing strike, with September and August numbers revised down by 112,000 jobs combined.
Apple and Amazon earnings
Amazon (AMZN) and Apple AAPL released quarterly earnings after the close on yesterday.
Amazon showed strong overall performance, though cloud revenue was slightly below projections. Shares rose 6% after-hours, recovering from a 3.4% decline earlier in the day.
Apple reported earnings and revenue beats but saw net income decline because of a European tax-related payment and gave a cautious iPhone forecast. Services revenue also missed estimates, with shares down 1.8% in after-hours trading.
AI rollout continues
Meta and Microsoft’s earnings reports reflected rising expenses in artificial intelligence (AI) investments, which added to investor concern.
These AI investments, while costly, signal long-term growth potential similar to the early internet era, likely benefiting data centers, chip makers and even nuclear energy companies like Oklo (OKLO). The AI sector is still in its infrastructure phase, setting up for future consumer-oriented offerings.
Additional news includes a tentative resolution of the Boeing (BA) strike resolution, Ford (F) halting F-150 EV production, an upbeat Intel (INTC) upbeat earnings and Exxon (XOM) and Chevron (CVX) reporting strong earnings and dividend increases.
Today’s trading may be influenced by earnings reports, jobs data, positioning ahead of next week’s election and the Federal Reserve’s interest rate decision on Nov. 7.
Sticking to long-term investment plans remains advisable.
JJ Kinahan is CEO of IG North America—which includes tastylive, tastytrade and IG's FX Business. Kinahan traded for 21 years at the Chicago Board Options Exchange. He serves on the CBOE Advisory Board and the SIFMA Options Committee. @thejjkinahan
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.
© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved. Applicable portions of the Terms of Use on tastylive.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.