MICROSOFT: Beats Earnings

Microsoft had great Q3 earnings by beating earnings and revenue estimates. The tech giant reported revenue of $56.5 billion, much higher than the $49.4 billion in Q3 last year. The Intelligent Cloud division of Microsoft, which includes its Azure operations, generated $24.3 billion in revenue for the quarter vs. the estimate of $23.6 billion. Over the past year, Microsoft has emphasized AI as a fundamental component of its operations, declaring a massive $10 billion investment in OpenAI, the creators of ChatGPT.

In February, Microsoft introduced versions of its Bing search engine and Edge browser enhanced with generative AI capabilities. The company has rolled out a plethora of AI features for its products that have made them significantly better. Microsoft has recently completed its $69-billion purchase of Activision Blizzard. This acquisition, the biggest in Microsoft's history, immediately positions it as the world's third-largest video game firm in revenue.

Earnings:

• Earnings per share: $2.99 adjusted vs. $2.65 expected

• Revenue: $56.5 billion adjusted vs. $54.4 billion expected

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GOOGLE: Earnings Are In

Google beat earnings and revenue estimates in its Q3 earnings report. Revenue was $64.1 billion, significantly higher than the $57.3 billion the company brought in this time last year. However, the cloud business had a poor showing, which sent the stock down after the announcement. Google brought in $8.41 billion for their cloud business while Wall Street was looking for $8.6 billion. Even though the company fell short in cloud revenue, its advertising segment generated $59.7 billion, surpassing the anticipated $58.9 billion consensus estimate.

Google has ramped up its investments in generative AI after being unexpectedly outpaced by Microsoft, which integrated the technology into its offerings in February following an investment in AI firm OpenAI. In response, Google has launched a series of generative AI tools for its consumer and corporate sectors.

Earnings:

• Earnings per share: $1.55 adjusted vs. $1.45 expected

• Revenue: $64.1 billion adjusted vs. $63.1 billion expected

META: Sued by 42 States

A group of 42 attorney generals from both sides of the political aisle are taking legal action against Meta, claiming that its social media platforms, Facebook and Instagram, have addictive features targeting children and teenagers. This broad scope of attorney generals have teamed up on this issue in a rare bi-partisan effort. A total of 33 state attorney generals have initiated a federal lawsuit against Meta in the Northern District of California. On the other hand, nine more attorneys general are pursuing legal actions within their respective states.

This is not the first time Meta has faced a massive legal lawsuit. In 2020, they were sued by 48 states and the FTC in a huge lawsuit. However, this will not be easy for the attorney generals. Meta has one of the largest legal and lobbying collations in the history of United States corporations.

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One of the Tax Haven Kings

The world's largest and most profitable public company pays almost $0 in taxes on its products by storing their profits on a secret island. In 2022, Apple brought in $394 billion in revenue and has a stock market cap of over $2 trillion. However, since 1990, they have been incredibly savvy in avoiding paying product taxes. Apple has consistently set up subsidiaries or “shell companies” in different tax haven countries. If you didn’t know, a tax haven is a country that offers companies and investors the chance to pay minimal and sometimes even no taxes for their businesses, even if they don’t operate in this country.

These Apple “shell companies” charge a royalty fee on Apple’s products sold worldwide, and the revenue is passed through to these companies on a 0% income tax basis. This complex strategy has saved Apple billions in taxes since 1990, but in 2017, the European Union was fed up and charged Apple $15 billion in back taxes. Tim Cook did not take kindly to these fines, so he moved the shell companies to Jersey and, no, not New Jersey but a tiny island off the coast of Europe that charges large corporations 0%.

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