Meta & Microsoft Earnings Previews

Meta (NASDAQ: META) Q4 2024 Earnings Preview

Meta Platforms – Consensus Expectations for Q4 2024, Past Earnings Surprises, Revisions, and CAGR

Source: Visible Alpha consensus (January 23, 2025). “Previous Surprises” indicate the direction that specific line items beat or missed. “Consensus Revisions” show the trajectory of line items from a given date.

According to Visible Alpha consensus, estimated revenues for both the Family of Apps and the Reality Labs segments in Q4 2024 have not moved since October, driven by continued strength in DAU performance in the Family of Apps segment across geographies, especially in the U.S. and Europe.

For the Family of Apps segment, expectations for operating profit have edged up each quarter since last January to $25.3 billion, up slightly from last quarter, but there is some debate among analysts. Into Q4, estimates for the Family of Apps’ income from operations range from $22.9 billion to $26.6 billion. Losses at Reality Labs are expected to be -$5 billion and have remained stable since last July, ranging from -$3.5 billion to -$6.5 billion. We are looking forward to hearing the Company’s outlook for both business lines in the earnings call.

Looking ahead, consensus expects the Q1 2025 Family of Apps revenue and operating profit to be $41.2 billion and $20.7 billion. The FY 2025 expectations for sales and operating income from the Family of Apps have been moving around and shifted down a bit from $185.2 billion to $184.0 billion and $97.1 billion to $95.5 billion since last quarter, driven by slightly changing views about this business. In addition, projected losses from Reality Labs for 2025 have slightly improved since last quarter, declining from -$20.1 billion to -$19.4 billion. Capex investments in Q1 and for the full year in 2025 have been moving higher, suggesting that Meta may continue to invest in its AI strategy.

The stock has been strong since last January, delivering over 80% return and outperforming the S&P 500. What new information will come out of the Q4 release that may provide upside to the stock?

Meta Platforms Consensus Revisions

Source: Visible Alpha consensus (January 23, 2025). “Previous Surprises” indicate the direction that specific line items beat or missed. “Consensus Revisions” show the trajectory of line items from a given date. Stock price data courtesy of S&P Global. META’s current stock price is as of the market close on January 22, 2025.

Microsoft’s (NASDAQ: MSFT) Fiscal Q2 2024 Earnings Preview

Microsoft – Consensus Expectations for Q2 2024, Past Earnings Surprises, Revisions, and CAGR

Source: Visible Alpha consensus (January 23, 2025). “Previous Surprises” indicate the direction that specific line items beat or missed. “Consensus Revisions” show the trajectory of line items from a given date.

According to Visible Alpha consensus, total revenues expected for Q2 have remained around $69 billion since last January, driven by resilience in its core business segments. In particular, the Intelligent Cloud segment, which makes up 38% of total revenues, is projected to remain solid, with consensus estimates now expecting $25.8 billion for Q2, driven by Azure.  Azure revenues are expected to generate $18 billion in Q2 with AI Services expected to generate $2.3 billion. The Q2 consensus for the Intelligent Cloud business’s operating profit margin is 43.8% and 42.8% for the full year.

We are closely watching what the company will say about the outlook for further investments, as Microsoft’s FY 2025 CapEx numbers have continued to increase steadily since last year. In addition, we are looking for further financial details from Microsoft about their partnership with Softbank, Oracle, and OpenAI in the Stargate Project. According to consensus projections, CapEx estimates are projected to increase to over $18 billion from $44.5 billion at the end of FY 2024 to $63.1 billion in FY 2025, up 4x from FY 2020.

Microsoft stock has traded up 5.9% since the July earnings release, and is up 21.2% since January 2024, underperforming the 25% delivered by the S&P 500. The consensus P/E for FY 2026 is up to 30x. Could the Q2 release and H2 outlook for FY 2025 begin to drive outperformance in the stock?

Microsoft Consensus Revisions

Source: Visible Alpha consensus (January 23, 2025). “Previous Surprises” indicate the direction that specific line items beat or missed. “Consensus Revisions” show the trajectory of line items from a given date. Stock price data courtesy of S&P Global. MSFT’s current stock price is as of the market close on January 23, 2025.