Alphabet wins the Mag 7 earnings sweepstakes as MSFT sinks on beat, META down 7% on miss

Wednesday's big tech earnings, the most significant single day for earnings for the rest of the year, came in mixed. Microsoft (MSFT) and Meta Platforms (META) saw their share prices sink, while Alphabet (GOOGL) stock rallied more than 5%.

All three of the Mag 7 giants beat their particular Wall Street consensus figure for revenue, but Mark Zuckerberg's Meta missed its GAAP earnings per share (EPS) estimate by $5.66 after delivering a figure of $1.05. Meta blamed the unexpected hit on a "one-time, non-cash income tax charge of $15.93 billion" and said that it would pay substantially less tax in the fourth quarter. The stock sank some 7% afterhours.

Revenue, however, was a bright spot for the social media giant that owns Facebook and Instagram. Meta reported revenue of $51.24 billion, up 26% YoY and more than $1.8 billion above the average analyst estimate.

Microsoft unveiled adjusted EPS of $4.13 or $0.47 better than consensus. Meanwhile, revenue of $77.67 billion rose 18% from a year earlier and arrived $2.3 billion ahead of consensus. Microsoft's cloud revenue of $49.1 billion rose 26% YoY, slightly less than the 30% that investors expected. MSFT stock sank 3% on the news.

Alphabet was the star afterhours. GAAP EPS of $2.87 beat by $0.61, and revenue of $102.35 billion rose 16% YoY and bested the consensus by $2.2 billion. Google Services revenue climbed 14% YoY, while Google Cloud revenue surged 34% over that time period.

GOOGL 1-hour stock chart

Federal Reserve cuts rates but remains tepid on December cut

The Federal Reserve (Fed) surprised markets earlier in the afternoon after delivering the expected 25-basis-point cut to interest rates. At the press conference following the decision, Fed Chair Jerome Powell downplayed the likelihood of another cut in December as he fielded questions about the stark differences of opinion among committee members. Powell also said that the central bank would end quantitative tightening in December.

US treasuries with terms between 12 months and 10 years all saw their yields rally more than 2% on the news. The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) responded by selling off, but the NASDAQ Composite held on to a 0.55% gain on the day.

Mike McKee from Bloomberg pointed to Fed Chair Powell using the phrase "if we cut again" late in the press conference as a sign that the central bank might pause cuts for now. Powell suggested that extrapolating the Consumer Price Index (CPI) inflation data into Personal Consumption Expenditures (PCE) would project inflation rising 2.8% in September compared to the latest 2.7% reading, meaning that US inflation is still front of mind for the Fed Chair.