00:00 Speaker A

But let’s get more on Big Cap Tech right now. Meta and Microsoft shares rocketing higher. Microsoft topping a $4 trillion dollar market cap off the back of their strong earnings results, although it has pulled back a little bit right now, but the AI euphoria fueling a rally in broader markets as well. Joining me now on this Yahoo Finance Tech editor, Dan Howley. Dan, first of all, give us some of your takeaways, some of your themes that we saw from these results.

00:37 Dan Howley

Uh yeah, I mean, look, let’s start off obviously, you’ve mentioned it. Microsoft hitting the $4 trillion dollar mark, just the second company to do this beyond uh Nvidia. Uh I think, you know, the the highlight number for Microsoft during the call uh was its $75 billion dollars in revenue from Azure. That’s the first time we really got Azure revenue from Microsoft. Previously, it was like, okay, well, Azure growth was X percentage, uh intelligent cloud, which includes Azure brought in, you know, blank number. So you had to kind of infer what Azure was a part of that. But now, uh they’re coming out and saying uh it was 34% growth, I believe on that $75 uh billion dollars uh of revenue. That’s year over year uh for the company. Uh huge win for for Microsoft. A lot of uh the obviously the benefit of OpenAI uh being a part of Microsoft using their cloud infrastructure. Also Microsoft spreading that technology out across its its different uh product offerings. Uh and then on on meta side of things, look, they beat on the top and bottom line just like Microsoft, and then they offered better than anticipated Q3 expectations. So that obviously sent shares higher. Uh the company also uh acknowledged the kind of moves that they’re doing as far as their AI uh recruitment, where they’re poaching people from, you know, OpenAI or or Apple, uh and bringing them into their their super intelligence lab. Uh they said that there’s going to continue to be upward pressure on spending, uh that includes the data center. But then they also basically said, look, we’re hiring a lot of people for this. So that’s going to be the second main contributor to that upward pressure. So it’s it’s a lot going on for both companies here, but, you know, obviously the the biggest takeaway overall is that their AI efforts appear to be paying off big time at this point. And don’t forget, we have just seen Google announce uh in last week saying more or less the same thing. Amazon’s after the bell today. They really need to show that their AI efforts are stepping up or the market could turn sour on them.

04:27 Speaker A

You know, uh Dan, tell me if it feels this way to you. Uh you know, obviously, we’ve been talking about AI for a while. We’ve been talking about the big spending that we’ve been seeing for a while. But it felt there, especially when it came to sort of software names, but also even these names, like, was it actually real? Was it actually happening? Was it actually starting to bear fruit? And this feels like the quarter, maybe that is that tipping point, because not only are we hearing from these companies, we’re hearing from a lot of the enterprise software companies, the service nows of the world, for example, that are also using this stuff. So it feels like we maybe are getting to that point. What what do you think from your coverage?

05:33 Dan Howley

Yeah, Julie, I think you’re you’re totally right, right? I mean, you know, we were previously talking about how they’re, you know, plowing billions of dollars into these data centers, you know, springing up all around the country. Um you know, there’s been the obviously the conversation of, you know, how those impact neighbors in regions, the the electrical usage, the water usage. Uh those continue to be uh issues as well. But you know, on the on the revenue side, we’re we’re starting to see that kind of payoff, those those big build outs showing for them finally. Now, I think one of the things to point out is that for for something like an OpenAI, they’re getting a lot of that uh through consumers, right? Regular folks who are just going on and using uh OpenAI chat GPT. Uh but for the likes of Microsoft or uh Google, uh you know, that’s also going to be on the consumer side, but also in the enterprise side. Microsoft is really, you know, enterprise forward. And so they’re benefiting from from the enterprises at large. I think, you know, we we’ve kind of had the discussion before where in my mind, right now at least, the enterprise is where AI kind of makes sense the most. Uh you know, you have Apple being criticized for not having AI in their iPhone uh that’s up to snuff. I mean, are you going to buy an iPhone because of the software you never have? You know, you didn’t go out and buy it for Siri to begin with. You bought it because it had a better camera. So I don’t really know if that’s going to be, there’s going to be a moment where you say, cool, awesome software on this iPhone, got to go out and buy it now. You’re going to say, cool, it folds, or cool, it’s a lot thinner. I got to go out and buy it now. Or my battery stinks. I need a new one. Um so the consumer side is still kind of everybody in their their like little app silos, you know, you’re on your chat GPT, you’re on your Gemini. Right. But for the enterprise, I think that really is is what the big story is and that’s really where we’re starting to see this growth.