Big Tech Earnings Preview for the Week: Microsoft, Meta, and Uber Set to Shape the Market
This week, Microsoft (Wednesday), Meta (Wednesday), and Uber (Thursday) are each set to release their quarterly earnings, bringing with them a mix of high expectations and fresh market anxieties. As investors eagerly await, all three companies hold unique positions that could significantly impact their sectors, and the broader market. With robust YTD gains, exciting partnerships, and shifting strategic goals, these reports could reveal the tech trends to watch as 2025 approaches.
Microsoft: The AI Juggernaut—What’s Next?
Microsoft is riding high this year, up over 35% YTD, largely fueled by its aggressive expansion in AI. After launching Copilot and continuing its multi-billion-dollar investments in OpenAI, Microsoft’s focus has clearly shifted to AI across its enterprise and consumer products. Yet the last quarter’s earnings call hinted at potential hurdles. CFO Amy Hood emphasized the costs associated with integrating AI at scale and warned that we might see a bit of “financial pressure” as the company focuses on getting these AI products to market faster.
This quarter, however, is expected to deliver more AI-driven revenue streams, with options sentiment revealing strong bullish positions. Options with a strike price between $320 and $350, currently showing high open interest, indicate investor confidence that Microsoft may again surpass earnings expectations. Options activity points to a potential 7-10% swing in stock price post-earnings, either up or down, as investors place their bets on AI’s market impact.
Why Investors Should Watch: Microsoft’s success in rolling out AI at scale could justify its current valuation, but any significant miss on revenue or higher-than-expected costs in this space could spark volatility. If Microsoft continues its positive momentum, it may set the bar for tech giants betting big on AI. However, with a forward P/E ratio around 28, there’s little room for error, and investors should be prepared for market shifts if the numbers don’t fully meet the hype.
Meta Platforms: Can Ad Growth Balance the Metaverse Ambitions?
Meta has enjoyed an impressive 145% gain YTD, as ad revenues rebounded while the company doubled down on its Metaverse ambitions. But Mark Zuckerberg’s “Year of Efficiency” focus from last quarter might feel shaky against the heavy investments Meta continues to pour into Reality Labs. Last quarter, Reality Labs saw operating losses extend to nearly $4 billion, a number that raised eyebrows on the last earnings call. Zuckerberg emphasized that Reality Labs’ costs were “necessary bets” on the future, but these bets have yet to produce revenue. Meta’s core ad business will need to maintain, if not exceed, last quarter’s impressive growth to balance out these expenditures.
In the options market, the sentiment around Meta’s stock is mixed but leaning toward cautious optimism. Investors are holding significant positions at the $300 and $320 strike prices, indicating a likely 6-8% stock movement post-earnings. These options reveal a divide: Some are betting on stronger ad performance, while others remain wary of Reality Labs’ bottomless funding needs.
Why Investors Should Watch: Meta’s ad revenue performance and updated guidance on Reality Labs will be the headline stories. With recent headwinds in digital advertising and high Reality Labs costs, Meta could see a stock swing if ad revenue surprises to the downside. On the other hand, a solid ad performance might alleviate concerns, setting Meta up as a continued leader in the digital space while it invests in its Metaverse dream.
Uber: Profitable at Last—But What’s the Cost?
Uber’s long journey to profitability marked a high point last quarter, as the company posted its first GAAP operating profit, largely thanks to stringent cost controls. CEO Dara Khosrowshahi highlighted the significance of Uber’s cost efficiency in last quarter’s transcript, but also flagged upcoming investments in autonomous driving technology. Uber’s partnerships with Avride and WeRide to integrate autonomous vehicles into its ridesharing and delivery fleets show it’s aiming for cost-efficiency and innovation in the long run.
Options chains for Uber indicate a neutral sentiment, with strikes around $50, showing a more muted expectation for significant price swings. Investors are likely eyeing a 2-4% potential post-earnings price move, signaling that Uber’s earnings may align closely with forecasts. However, should the company report higher spending in autonomous tech without offsetting revenue growth, the stock could react negatively.
Why Investors Should Watch: Uber’s story of growth at all costs has shifted to cautious profitability, but the costs tied to future-facing tech like autonomous vehicles remain significant. If Uber can control these costs while expanding its autonomous fleet, it may bolster investor confidence. However, a higher-than-expected rise in expenses could dim the shine of last quarter’s profitability and put pressure on the stock.
What This Week Could Mean for Investors
As Microsoft, Meta, and Uber gear up to report, the tech world is holding its breath. With options sentiment and YTD gains hinting at high expectations but also caution, this week’s earnings could set the stage for each company’s next chapter. Whether it’s Microsoft’s AI expansion, Meta’s dual bet on ads and the Metaverse, or Uber’s quest for sustainable profitability through autonomous tech, each company is under a unique set of pressures—and opportunities.
For investors, this is a pivotal moment. The insights shared in each earnings report will likely shape market moves and guide sentiment as we head into the end of the year. Will Microsoft continue to lead the AI charge? Can Meta’s ad revenue offset its ambitious Metaverse spend? And will Uber sustain its hard-won profitability while innovating in autonomy?
Stay tuned, because this week’s reports could signal which of these tech giants will be the standout stories—and stocks—to watch as we move into 2025.
