November 1, 2025, Issue 10

Big Earnings in Big Tech

Big names in technology reported their quarterly results this week. While all of the results were above expectations, some stocks were rewarded and some were punished. The biggest loser of the week was META, parent company of Facebook and Instagram, and Whatsapp. Their shares started the week at $753 and ended it at $648 for a 14% haircut. Why you ask? On the surface everything looked great. Earnings came in at $7.25 per share vs an estimate of $6.69. This is just over $18B of profit on sales of $51.24 billion. Wall Street was expecting $49.4 billion in sales. That all looks rosy. However, the company unveiled a mysterious $15.9B one-time tax charge. On top of that surprise came the news that Mr. Zuckerberg intends to spend even more on his AI investments in the coming quarter into 2026. It’s unclear what profits another planned $190 billion in capital expenditures will lead to. META’s Llama AI model is well behind the leaders like OpenAI, Google, and Microsoft. So the market sold off. My take? I’m convinced that most of the world’s problems are caused by social media. So for me, this is a hate the product, buy the stock type of event. I believe that with the amount of users they have, and with the products in the pipeline, the market has put META on sale. I may hold my nose and dip my toe in the water.
The other loser was the aforementioned Microsoft. This one is a little harder to explain. MSFT reported $3.72 of per share profit or an astounding $27.7 billion on revenue of $77.6 billion. Revenue from Azure, their Cloud unit rose 40%, they continue to be the undisputed leader in productivity software through their Office suite of products, and their sales of devices like Surface computers and tablets rose to $13.8B. So what gives here? A couple of things. Again, capital expenditures (capex) was $35B in this last quarter and MSFT said they would be spending more than that in the coming quarters. And again, analysts are starting to wonder about the return on these huge investments. Further, Microsoft also acknowledged that they are the largest shareholder of OpenAI (think ChatGPT). That stake, while worth a reported $135B, cost MSFT about $3.1B in the quarter or about 0.41c per share in profits. the company’s stock started the week at $555 and ended it at $517 for a 7% loss. Again, I believe this could be spot to take a step into the stock if you do not own it. We are holding our small position for now.
The week’s big winners after earnings? Amazon and Google. Google began the week at $256 and ended at $281 for a 10% gain. The owner of YouTube, Gmail, and the world’s most used search platform passed $100B in revenue for the quarter for the first time ever. Sales across all product lines were strong with Cloud services growing at a 34% pace. To be sure, they are also promising $95B of capex spending. The difference here is that Google is reporting 650 million users of Gemini, their AI agent. This shows investors the path to profit, unlike the META story.
AMZN opened the week at $221 and closed it at $244 for a 10.4% gain on the week. Again, robust growth in the AWS cloud division, along with retail growth at the world’s largest online store helped grow profits. This is a long term story as well, and we will hold on to our small position for the foreseeable future.
Apple also released solid results, and expectations for a great 4th quarter. The stock has flown to $270. Admittedly, we did not see this one coming. Apple is so far behind in AI that they aren’t even talking about it. But once you are in the ecosystem, you don’t switch out. This powers growth and buying for new cycles and products. Apple should be a long term position as well. We will look for share price weakness to potentially start a position. As always, we will advise in advance of any trades.
Our holding Reddit also released an excellent quarterly report this week. Revenue came in at $585 million against estimates of $546M, with profits at 80c per share vs estimates of 51c. Interstingly, Reddit is a supplier of information to the AI giants. ChatGPT and others scan Reddit’s chats for information that they pass on to their users. This is a source of revenue for RDDT. While the stock rose 7% after earnings, it is well of its highs. We had an average purchase price of $143 on RDDT and have been selling in the $235 range. We will hold our remaining shares as we think the stock could retake its previous highs around $282.

The Week Ahead

Earnings reports will continue to come in this week from key holdings. Draftkings, a major disappointment, will report on Wednesday as will SNAP. Peloton will report on Thursday. On Tuesday we will get an update from JOBY. While this company will not show very much in the way of sales and profits, I am anxious to hear about the progress they are making towards FAA certification for their electric air taxis.

The Time, She Flies

Well, as I sit to write this, it is astounding that we are in November. The weather is chilly, and winter is around the corner. Equally astounding? Baseball season is NOT over! Let’s hear it for the Toronto Blue Jays, heading into a deciding game 7 in their home ballpark tonight. We will be yelling at the TV and hoping for the best. As an avid Montreal Canadiens and Expos fan growing up, the irony of cheering for a team from Toronto is not lost on me. But I confess that they are now the team of an entire nation. So… Go Jays!!

Thought of the Day

Today is special because I have two thoughts! A rare occurrence indeed. First of all, yesterday was Halloween. I harken back to my days of Trick or Treating. The goal? Get as much candy as possible. Man, I miss those days. Did you costume up? If so, what were you? What were the best costumes you saw at your events?

Here is another one loosely related to Halloween. I saw a genie costume and got to thinking. If you were granted three wishes, what would they be? I know as I’ve aged, mine have certainly changed. There was a time i would have wished fora Ferrari and and a ton of cash. Don’t get me wrong, I would still take some money. But health and happiness of myself and my loved ones have climbed the charts to numbers 1 and 2. Let us know in the comments or by replying to this email.

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