Major earnings week weighs on tech stocks

This is a segment from the Forward Guidance newsletter. To read full editions, subscribe .

US equities opened higher Friday morning, clawing back some of Thursday’s losses that saw the Nasdaq Composite and S&P 500 indexes drop 1.8% and 1.2%, respectively. 

The selloff was led by tech stocks, triggered by disappointing outlooks from giants Meta and Microsoft, both of which reported after the close yesterday. 

Both Meta and Microsoft beat expectations on some earnings metrics, but you wouldn’t know that looking at the share prices. Analysts attribute Thursday’s drops (-4% for Microsoft and -3% for Meta during after hours trading) to disappointing projections from both companies. 

Microsoft execs estimate between $68.1 billion and $69.1 billion in revenue for Q4, missing Wall Street’s forecast of $69.83 billion. The tech giant anticipates its cloud computing platform, which saw a 33% increase in quarter-over-quarter revenue during Q3, will slow during the final months of this year. 

Meta similarly beat on earnings per share and revenue for the third quarter, but execs say its spending spree is going to continue through the end of 2024. They calculate capital expenditures for the year to come in between $38 billion and $40 billion. This is up from the range given during the company’s last quarterly earnings report. Meta is also forecasting a “significant” increase in AI-related infrastructure expenses in 2025. 

Tom Essaye, founder of Sevens Report Research, said it wasn’t just Big Tech weighing on equities Thursday. Earnings across the board were disappointing (looking at you, Uber, Ebay and Intercontinental Exchange), plus economic data looks like we may see higher rates for a more sustained period of time.

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter .

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter .

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.