🔎💾 GOOG/MSFT Earnings Surprise, META Disappoints...
Hi all,
What a turbulent week in the markets! We have a great update for you today below. Currently I am visiting some friends in Dallas, Texas. I am here just to hang out and been trying to take some much needed days away from creating content as I was feeling slightly burnt out last week. Plans so far have included eating sushi, going to the NorthPark mall, an engagement party, and today I’ll be going to the Dallas Mavericks game at 2:30 Central Time! I also ran 4.5 miles along the Katy Trail yesterday in humid temps - sweatyyyyy.
In other personal news, I’ve been playing some Chess (awful at it, my elo is 650 on Chess.com for 10 minute games) and been scoping out some other video games I can play in my free time.
In content news, I’m trying to go back to fundamentals and think about what type of videos I’d really want to watch, and even if the topic isn’t as “engaging” per se, I’d like to make the videos engaging and entertaining in my own way. Stay tuned!
Enjoy this week’s Hump Days.
— Humphrey, Tim, & Rickie
Market Report
Mostly good earnings from the S&P 500 except for Meta…
Of the 230 S&P 500 companies that have reported earnings so far, 81% have delivered higher-than-expected results, above the 10-year average of 75%. Notable company results included Alphabet, Microsoft, and Meta Platforms.
Microsoft reported a significant increase in quarterly sales and profit driven by strong corporate demand for its cloud services and AI offerings. Third-quarter revenue rose 17% to $61.9 billion and Azure's revenue grew by 31%.
The company plans to continue integrating AI into its products and increasing capital expenditures to support rising demand.
Alphabet surpassed first-quarter revenue expectations with a notable increase driven by its cloud computing sector, reporting $67.6 billion in sales. The company announced its first-ever dividend and an additional $70 billion stock repurchase.
Despite challenges in its core search business due to emerging generative AI competitors, Alphabet's cloud and YouTube segments showed significant gains.
Meta Platforms faced some concerns from investors after CEO Mark Zuckerberg announced that the company would increase its spending on AI significantly, projecting expenditures to rise to between $35 billion and $40 billion. This shift towards heavy investment led to a drop as much as 16% the stock price.
The increase in spending, along with a forecast for slower sales growth, overshadowed an otherwise strong first quarter, with revenue growing by more than 27% year-over-year to $36.5 billion and profits doubling to $12.4 billion.
Inflation isn’t going away and consumer spending remains strong
In March, core PCE, a measure of inflation that excludes volatile food and energy costs, rose by 0.3% from the previous month and 2.8% from the previous year.
This increase, coupled with a significant 0.5% rise in inflation-adjusted consumer spending — the largest of the year — suggests persistent economic strength and consumer activity.
White-Collar Job Growth Stalls While Labor Market Remains Strong
The labor market is showing signs of strain in white-collar sectors such as finance, technology, and media across major U.S. cities including Chicago, Los Angeles, and San Francisco, where nearly 120,000 corporate jobs have been lost over the past year.
This contraction in white-collar contrasts with the broader labor market, which still remains quite strong. Notable companies like Citigroup, McKinsey, and Tesla have initiated layoffs. Temporary employment has also declined, which is often often seen as a precursor to economic downturns.
Forecast Ahead
Big Number
According to the National Association of Realtors, home-buying affordability fell last year to the lowest level since 1985. The median household needs more than 40% of its income to cover payments on a median-priced home, according to the Federal Reserve Bank of Atlanta.