Lots of stories this week in the world of Gumshoe, as earnings season really hits full swing, and lots of our companies reported earnings this week… I’m not going to get to quite all of them, but I do have updated thoughts and opinions to share on a bunch of stocks this week, and we’ll catch up with the others before too long.
Meta Platforms (META) got great news in the possible ban of TikTok, the biggest competitor for Instagram… but also reported some disappointing news, in the form of lower earnings forecasts than investors had oped for, and a more expensive plan to boost capital spending as they fight the AI wars (and buy all those NVIDIA chips, etc.) That brought the shares down about 10% after hours, and started out our “big tech” earnings circus on a little bit of a sour note, even though we don’t actually own META.
As is usually the case, weak numbers out of META make people worry about all the other advertising businesses… especially Alphabet (GOOG, GOOGL)… so there was some concern that the relatively weak forecasts at Meta might not be conservative estimates of ad sales later this year at Facebook or Instagram, or not just related to Meta’s big surge of capital spending on AI… it might be systemic, a sign of lower demand for advertising.
Maybe. But when it comes to the first quarter, at least, both Meta Platforms and Alphabet looked great (it was the META guidance that investors didn’t like, not their actual quarterly earnings or revenue). META had revenue growth of 27% and earnings per share growth of 114% in the first quarter.
And when their earnings came out a day later, Alphabet pretty much kept up with Meta’s blistering growth, their earnings per share hit $1.89 in the first quarter — about 20% higher than analyst forecasts, and 62% growth from a year ago. Revenues came in at $80.5 billion, about 4% higher than expected and representing revenue growth of almost 20%. The stock hit new all-time highs in after-hours trading as a result.
The tricky thing is that Alphabet doesn’t give as much guidance to analysts as Meta does, so we don’t really know as much detail about whether they expect softness in ad sales next quarter or throughout the year, or how much they might spend on CapEx to compete in AI. They ...