MSFT

The social media giant is pouring record sums into an artificial intelligence future, forcing investors to decide if they are buying a proven profit machine or funding an unproven science project. Meta Platforms (META) is a company you know, but it may not be the company you think it is anymore. For years, it was the undisputed king of social media advertising. Today, it’s in the middle of a pivot into one of the most expensive, ambitious artificial intelligence builds the world has ever seen. After gaining 20% over the past month, the stock still trades about 13% below its 52-week high, leaving investors to weigh whether they are buying a dominant business at a reasonable price or funding a very expensive vision with no clear path to profit. When you look at Meta’s valuation, the market seems to be telling two different stories. On one hand, the stock trades at a price-to-earnings ratio of 23.7, roughly in line with the S&P 500’s 24.2. On cash flow, it even looks a bit cheaper, at 13.5 times operating cash flow versus the market’s 15.3. But on the other hand, its price-to-sales ratio of 7.8 is more than double the market average of 3.3. Investors are paying a steep premium for Meta’s phenomenal sales growth, which has averaged 22% annually over the last three years compared to 5.9% for the S&P 500. At the same time, the more modest earnings and cash flow multiples suggest a deep-seated caution about the large spending required to keep that growth engine running. What you get for that price is a business of genuinely rare quality. The core engine, the Family of Apps, including Facebook and Instagram, reaches an estimated 3.56 billion people daily and is a profit powerhouse. In the most recent quarter, revenue grew 33% year over year. The company runs an operating margin of 41%, more than double the S&P 500’s 18.4%, and converts a remarkable 58% of its revenue into operating cash flow. Management’s plan is to funnel this gusher of cash into its next act: building what it calls “personal super intelligence” through its new Meta Super Intelligence Labs. This involves developing its own foundational AI models, to power a new generation of personal and business agents. This vision is backed by a balance sheet built for exactly this kind of large project; with debt at just 5.2% of its market value and $124.0 billion in operating cash flow generated over the last y...

Big Tech earnings kick off next week with Google (GOOG, GOOGL) and Intel (INTC) set to report results on July 22 and 23, respectively. And investors will have their eyes on AI spending and returns, as well as chip sales. Microsoft (MSFT) and Meta (META), in particular, have been punished for their heavy investments in AI data center capacity, though Google and Amazon (AMZN) have dodged the same fate, as of late. Wall Street will want to hear more about how Microsoft is expanding its Copilot service and AI growth via its Azure platform. Meta watchers will be looking into how the company is using AI to improve ad sales and user engagement. Google and Amazon will need to deliver more of the same to keep Wall Street on their sides, while also ensuring they can keep their spending in check. Keep an eye on the hyperscalers' remaining performance obligations (RPOs), a measure of contracts they've signed but haven't realized revenue from yet, to get a sense of where growth is headed. On the chip side, it'll be all about sales and forward guidance. Nvidia (NVDA), Intel, AMD (AMD), and memory makers will need to show demand is keeping pace or accelerating. But even that might not be enough to satisfy investors who have recently sold the news on results from the likes of Nvidia. Apple's (AAPL) results will be interesting for a handful of reasons. While iPhone sales are always the most important number in the company's earnings, commentary on who is buying and why will be just as noteworthy. Analysts will be watching to see whether customers are buying now to get ahead of potential future price hikes or holding out to get their hands on the company's rumored foldable iPhone, set to launch this fall. Post-earnings discourse will also center around the impact of rising memory and storage costs on Apple's margins and future device pricing. Email Daniel Howley at [email protected]. Follow him on X at @DanielHowley. Click here for the latest technology news that will impact the stock market. Read the latest financial and business news from Yahoo Finance

A spectacular run for chip makers, server suppliers, and memory and storage names seems to have investors on edge.

Shares in IBM plunged more than 25% on Tuesday after the US tech giant released disappointing preliminary second-quarter results. IBM’s stock was on track for an even steeper single-day decline than it suffered during ⁠the 1987 “Black Monday” crash. IBM had issued a profit warning and blamed shifts in corporate customers’ spending. The company said revenue for the three months ending in June came in at $17.2bn, up just 1% year-over-year. The company said it had “faltered” in keeping pace with a move in corporate spending from software ⁠towards datacentre infrastructure and cybersecurity, and forecast second-quarter revenue below estimates, in a sign of the impact of AI on the ⁠sector. Related: Inflation cools to 3.5% in June in relief brought by brief US-Iran peace deal The warning triggered a ​slump of more than 25% in IBM’s shares and a selloff in the broader software sector on Tuesday. Microsoft, ServiceNow, Salesforce and Intuit fell between 3% and 5%. A global rush by tech companies to build out artificial intelligence infrastructure has sent demand for servers, memory chips and storage soaring – driving up prices and creating supply shortages across the industry. IBM said that toward the end of June, many of its big corporate customers rushed to buy that hardware to get ahead of expected price increases. That rush pulled spending away from IBM’s higher-margin mainframe computers and related software, which process millions of daily transactions for industries such as banking and airlines – the products the company had been counting on. It also noted that businesses were prioritizing cybersecurity spending given recent breakthroughs in AI hacking abilities. Related: Chasing new skills, going back to basics and pushing for collective action: how software engineers are adapting to AI Arvind Krishna, the IBM chief executive, said in a letter to investors, “In the last ‌few weeks of June, we saw clients shift their quarterly capex [capital expenditure] spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases.” He added that “numerous large deals” had failed to ​close as expected. The company’s expected revenue of $17.2bn for the second quarter paled in comparison with $17.86bn forecast by analysts. Adjusted earnings per share are expected to be $2.93, compared with analysts’ estimate o...

IBM (IBM) ended trading Tuesday down more than 25%, its worst drop since at least 1968, after the company preannounced earnings that fell well below Wall Street's expectations. Big Blue attributed the results to customers shifting spending away from software and mainframe products and toward AI servers and memory. Analysts had expected IBM to report adjusted earnings per share (EPS) of $3.02 on revenue of $17.86 billion, but the company came up short, posting adjusted EPS of $2.93 and revenue of $17.2 billion. In a statement, IBM CEO Arvind Krishna said the company was prepared for a low-single-digit decline in its z17 mainframe business for the quarter, but the results were far worse than projected and are at least partially related to the global memory shortage. "In the last few weeks of June, we saw clients shift their quarterly [capital expenditures] spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases," Krishna said. "This dynamic impacted client buying patterns. While we anticipated some supply chain related impact in our expectations, we did not anticipate the magnitude of the capex reprioritization," he added. IDC's Ashish Nadkarni, who leads the firm's enterprise infrastructure global research group, wrote in a note that Wall Street's reaction to Krishna's warning was likely stronger than warranted, but that investors shouldn't dismiss his statement. "It may not mean the collapse of the mainframe business, but it does mean that IBM is not isolated from the strategic reallocation of enterprise budgets in order to address the acceleration of AI adoption," he explained. IBM stock was previously off just 4.8% since the start of the year heading into Tuesday, but it is now off 26%. The company's chief competitors aren't faring much better. Shares of Oracle (ORCL) are off 33% year to date, while Microsoft has declined 20%. Accenture (ACN), meanwhile, is down 50%. IBM will hold its quarterly earnings call on July 22. Email Daniel Howley at [email protected]. Follow him on X at @DanielHowley. Click here for the latest technology news that will impact the stock market. Read the latest financial and business news from Yahoo Finance

Software stocks were hammered after IBM preannounced weaker-than-expected Q2 financial results. Shares in IT services firms also fell.

Microsoft shares rose 0.2% in overnight trading ahead of Monday, bucking declines across the broader market. The U.S. launched several waves of strikes on Iran on Sunday over an Iranian attack on a container ship in the Strait of Hormuz earlier in the weekend. Stocktwits sentiment for MSFT remained ‘bearish’ on Monday. Microsoft Corp.’s stock was curiously holding up amid a sharp selloff in the broader market due to a fresh escalation in the U.S.-Iran conflict. Microsoft shares rose 0.2% in overnight trading ahead of Monday, bucking declines across Big Tech, chip and software stocks and prompting a wave of bullish commentary from retail traders on Stocktwits. See what 10M+ investors are talking about. Get the Stocktwits Daily Rip for what retail is watching right now, free to your inbox “$MSFT is the safest earnings play at the moment $450 08/07 looks good,” a trader wrote, while another wrote, “$MSFT chips down. SaaS rallies seems to still be the norm.” Microsoft was the worst-performing Magnificent Seven stock in the first half of 2026, a period when chip stocks soared remarkably. As July kicked off, there seems to be an early reversal with investor funds moving back into the Big Tech names. “This stock is sh*t...but no matter how bad the boomer investors are, nor how atrocious Satya Nadella (their idiodic prideful) CEO is...this stock has at least 15% upside before earnings,” another trader posted. “Stay the course!” On Stocktwits, however, the retail sentiment for MSFT was ‘bearish’ as of early Monday, unchanged since the middle of last week. Microsoft is scheduled to report its fiscal fourth quarter earnings on July 29. Analysts expect revenue to rise 15% to $87.66 billion and adjusted profit to increase 16% to $4.24 per share, according to analysts' estimates from Koyfin. Currently, 53 out of 56 analysts rate MSFT ‘Buy’ or higher, and three rate it ‘Hold,’ per Koyfin data. Their average price target of $559.59 implies a 45% upside from the stock’s last close. The U.S. launched several waves of strikes on Iran on Sunday over an Iranian attack on a container ship in the Strait of Hormuz earlier in the weekend. Iran responded with attacks on Bahrain, Kuwait, Qatar, Jordan and Oman – regions hosting U.S. military forces – and said that the latest U.S. strikes have “rendered futile” all the diplomatic efforts of the last few months. The U.S. and Iran are ne...

This article first appeared on GuruFocus. HSBC identified 10 Buy-rated stocks it believes are well positioned ahead of the second-quarter earnings season, citing favorable trends across technology, financial, consumer and industrial sectors. HSBC named Amazon (NASDAQ:AMZN), Microsoft (MSFT), Meta Platforms (NASDAQ:META), Alphabet (GOOGL), AbbVie (ABBV), Caterpillar (CAT), Marriott International (MAR), Vertiv (VRT), NextPower (NXT) and Wells Fargo (WFC) as its preferred earnings-season ideas. The firm said the selections reflect company-specific growth drivers rather than a single sector theme. Warning! GuruFocus has detected 5 Warning Sign with AMZN. Is AMZN fairly valued? Test your thesis with our free DCF calculator. HSBC expects Amazon to benefit from continued cloud computing demand and AI infrastructure investments, while Microsoft could see further momentum from Azure AI services. The brokerage also pointed to Meta's AI-powered advertising tools, Alphabet's cloud and search businesses, and Vertiv's exposure to expanding data center spending. Outside technology, HSBC said AbbVie's immunology portfolio, Caterpillar's exposure to AI-related power demand, Marriott's asset-light business model and Wells Fargo's improving earnings outlook could support results. The brokerage also highlighted NextPower's project backlog and expansion efforts as potential growth catalysts heading into the reporting season.

VGT and VOO pair concentrated tech exposure with broad S&P 500 diversification, capturing AI upside while limiting single-stock earnings risk. VGT's top holdings include Nvidia, Microsoft, Apple, and Broadcom, all of which report earnings in late July, making the fund a direct AI earnings play. VOO's sector mix is 39% tech, 11% financials, and 8% healthcare, which provides a built-in hedge if technology earnings disappoint this season. Don't wait: the analyst who called NVIDIA in 2010 just revealed his top 10 AI stocks. See the full list FREE now. Second-quarter earnings season is set to kick off, with investors looking for confirmation that artificial intelligence spending can continue to translate into strong earnings. Rather than trying to predict which individual company will deliver the best results, I'd select two ETFs positioned to benefit from both the AI narrative and broader U.S. economic growth. These two funds are the Vanguard Information Technology ETF (VGT) and the Vanguard S&P 500 ETF (VOO). While individual earnings reports often generate significant volatility, investors do not necessarily need to guess which company will deliver the biggest surprise. Instead, ETFs offer a way to participate in potential upside while reducing company-specific risk. Launched in January 2004, VGT has long served as a way for investors to increase technology exposure in their portfolios. Charging an expense ratio of just 0.09%, the fund spreads its current assets under management of $146.58 billion across 328 holdings, providing a 25.21% year-to-date return. In the current bull market environment, technology remains the main driver of growth, and in my view this momentum will carry into the next earnings season. VGT provides concentrated exposure to many of the top names expected to drive market sentiment. Its largest holdings include Nvidia (NVDA), Microsoft (MSFT), Apple (AAPL), and Broadcom (AVGO), all companies at the center of the AI trade. Top holdings such as Microsoft and Apple are expected to release earnings near the end of the month (July 28th and July 30th, respectively). Don't wait: the analyst who called NVIDIA in 2010 just revealed his top 10 AI stocks. See the full list FREE now. With fears surrounding excessive capex, markets will be closely monitoring spending plans, demand for cloud computing, and the effective monetization of AI projects. If...

Oracle Corporation (NYSE:ORCL) was among Jim Cramer’s stock calls on Mad Money, as he highlighted the AI opportunities in neoclouds. Cramer highlighted the future valuation of the company according to some analysts, as he said: Photo by Adam Nowakowski on Unsplash Oracle Corporation (NYSE:ORCL) provides cloud and on-premises software, databases, and IT infrastructure to help businesses manage operations. While we acknowledge the potential of ORCL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years Disclosure: None. Follow Insider Monkey on Google News.

Asking for a Trend Host Josh Lipton previews several of the biggest stories to come tomorrow, Friday, July 10, including SK Hynix (000660.KS) making its debut on the Nasdaq, Delta Air Lines (DAL) earnings, monthly sales results from Taiwan Semiconductor Manufacturing Co. (TSM), and the pending approval of Congress' housing affordability bill.

Get insights on thousands of stocks from the global community of over 7 million individual investors at Simply Wall St. Commvault Systems has delivered a strong 96.4% gain over the past three years, yet its valuation picture is split, with a Discounted Cash Flow (DCF) intrinsic value estimate suggesting the stock trades below fair value while earnings based multiples lean the other way. Recent news around AI driven cyber resilience offerings and new partnerships adds another layer to the debate over what a fair price looks like today. A 96.4% return over three years suggests Commvault Systems has already rewarded patient shareholders, so any further upside case rests on whether current expectations for the business prove conservative. The push into AI driven cyber resilience and deeper alignment with partners such as Microsoft can support revenue and cash flow expectations. However, heightened competition and execution risk around new offerings may cap how much investors are willing to pay for that story. Commvault Systems only passes 2 of 6 valuation checks, which means that on the broader set of metrics it leans expensive rather than presenting as a clear bargain, even if the intrinsic value estimate points to a 23.9% discount. The issue now is whether Commvault Systems’ share price already reflects the good news around its AI and cyber resilience positioning, or if the intrinsic value estimate is signaling that investors are still pricing it too cautiously. Commvault Systems delivered -16.6% returns over the last year. See how this stacks up to the rest of the Software industry. The Discounted Cash Flow (DCF) model here takes Commvault Systems’ projected cash flows and discounts them back to today. On this view, the company’s latest twelve month free cash flow is about $238.7 million, with analysts and internal estimates assuming growing cash flows rather than a shrinking profile. That stream is capitalised into an estimated intrinsic value of about $193 per share. This intrinsic value implies the stock screens around 23.9% undervalued relative to the current share price. The multiyear Microsoft Azure partnership, which embeds Commvault’s cyber resilience tools natively in the cloud platform, is one factor that helps explain why the cash flow outlook incorporated into the DCF remains constructive even if the share price has already moved a long way. On ba...