Thursday's Market Playbook, Reaction to META & MSFT

Market Overview - The S&P 500 is attempting to reach the 7,000 level again, with mixed earnings results creating some headwinds [2][5] - Initial unemployment claims data is expected to be lower than street expectations, which could be bullish for the market [3] - The dollar is declining, positively impacting commodity prices, particularly copper, which is seeing significant gains [3][4] Meta Platforms - Meta's shares are up approximately 8.7% in pre-market trading, with revenue exceeding expectations at $59.8 billion, compared to the expected $58.5 billion [7][8] - Adjusted earnings per share came in at $8.88, beating the expected $8.81, and guidance for future revenue was a major beat by about $3.5 billion [8] - Q4 revenue increased by 24% year-over-year, with strong advertising revenue [8] - The company is cutting costs in certain areas while increasing capital expenditures in strategic areas, particularly AI [9][10] - Analysts are raising price targets for Meta following its strong results [11] Microsoft - Microsoft shares are down about 6.7% in pre-market trading despite revenue exceeding expectations at $81.2 billion, compared to the expected $80.2 billion [12] - Adjusted earnings per share were $4.14, above the expected $3.88, but guidance for Q3 was in line with expectations, lacking a significant upside surprise [12][13] - Azure growth was 39% year-over-year, slightly below expectations, and future guidance for Azure growth is also lower than anticipated [13][14] - Concerns are arising regarding the concentration of spend with OpenAI, which constitutes 45% of Microsoft's backlog [16][17] - Morgan Stanley has removed Microsoft from its top pick list for 2026, contributing to selling pressure [18] IBM - IBM shares are up more than 8% following strong earnings, with revenue at $19.69 billion, exceeding the expected $19.2 billion [19] - Adjusted earnings per share were $4.52, above the expected $4.32, with automation unit growth at 18% year-over-year [19] - The AI business grew by $3 billion, and the data unit saw a 22% increase [20] - The government shutdown previously impacted the Red Hat business, but recovery is expected now that the government is operational [20] - IBM is also making strides in quantum computing, which may position it favorably against competitors [22]