| |  | Oct 30, 2025 | | | | | Supported by |  | | | | | | Happy Thursday! Meta reports a 32% increase in costs due to its AI-related spending. Google Cloud drives Alphabet's revenue growth. The rate of Microsoft's revenue growth stays the same as the previous quarter despite strong cloud growth.
| | | | Meta Platforms reported a 26% increase in its third-quarter revenue that exceeded its own forecasts for the period. But the company also saw a 32% increase in its costs as it spent heavily to recruit superstar artificial intelligence researchers and operate its growing fleet of data centers. The huge growth in its costs—up from 12% the prior quarter—along with a warning from Meta to expect more of the same in the future rattled investors, sending its shares down more than 9% in after-hours trading. Meta reported third-quarter revenue of $51.2 billion, better than its own forecast of $47.5 billion to $50.5 billion, which showed the continued strength of its digital advertising business. At the same time, the parent company of Facebook, Instagram and WhatsApp raised its estimate for capital expenditures this year to between $70 billion and $72 billion, up from a previous forecast of $66 billion to $72 billion. Its capital expenditures last year were $39 billion. Meta said it expected "notably larger" dollar growth in capital expenditures next year, suggesting its capital expenditures could grow beyond $101 billion. The company attributed that growth to its plans to build more of its own artificial intelligence infrastructure and contract with cloud computing services. Meta also said it expected "significantly faster" percentage growth in total expenses next year due to infrastructure costs and employee compensation. Meta predicted that, in the fourth quarter, revenue growth could slow to 16%. The company said its augmented and virtual reality organization, Reality Labs, will see lower revenue compared to the previous year, when it introduced a new headset. | | | | Google's revenue from renting out cloud servers rose 34% in the September quarter compared to the same period last year, powering faster revenue growth at its holding company, Alphabet. The result, in part due to its cloud sales to artificial intelligence developers, gives the company more cover to spend on its own AI as well as to build more data centers for customers such as Anthropic. The Google Cloud growth in the third quarter was more than 2 percentage points higher than the growth it experienced in the second quarter and the unit's operating profit rose a remarkable 84% to $3.6 billion compared to the same period a year earlier. The company, citing its cloud growth, raised its capital expenditure projection to between $91 billion and $93 billion for the 2025 calendar year, 7% higher than its estimate three months ago. It spent roughly $24 billion on capex in the quarter compared to $33 billion of capex at Microsoft. Despite the increased spending, free cash flow rose 39% to $24.5 billion compared to the same period a year ago. While Google's chatbot Gemini lags OpenAI, the company said the app had 650 million monthly active users, up from 400 million monthlies as of May, which suggests it also has hundreds of millions of weekly active users. OpenAI says ChatGPT has more than 800 million weekly active users and expects to generate tens of billions of dollars in revenue from the chatbot in the coming years. Overall, Alphabet revenue rose 16% in the September quarter, 2 percentage points higher than its growth in the prior two quarters. And operating profits from its core Google advertising business rose 20% from the same quarter a year ago, excluding a one-time fine by the European Commission, thanks in part to the expansion of generative AI results in Google Search. Google revenue chief Philipp Schindler said AI also boosted advertising products, including targeting ads to users and quickly generating ad materials. Overall gross margins rose 1.6 percentage points, excluding the EU fine. The results may have eased some concerns about OpenAI eating into Google's core business. Shares rose 6% in after-hours trading. | | | | Microsoft revenue grew 18% to $77.7 billion in the three months ending in September, the same rate of growth as the June quarter, the company said Wednesday. Revenue growth stayed flat despite Azure cloud-server rental revenue rising 40% during the September quarter—3 percentage points higher than the growth Microsoft had projected three months ago—driven largely by server spending from OpenAI, Microsoft said. Shares fell 1.5% in after-hours trading. The results didn't include OpenAI's recent commitment to spend $250 billion on Microsoft's Azure cloud over an unspecified period, a deal the companies announced Tuesday. OpenAI has projected to spend $17 billion renting cloud servers this year, with the vast majority of that spending happening on Microsoft, but Microsoft can only recognize revenue from server rentals to power existing models and products rather than for the clusters of servers for training new AI. OpenAI projected $6.6 billion in such inference spending in 2025. Microsoft's capital expenditures rose nearly 35% to $34.9 billion compared to the June quarter as it continues to spend heavily on data centers to power AI applications for OpenAI and others. Still, Microsoft's gross margins were roughly unchanged at 65% compared to the same period a year prior, though free cash flow rose 33% to $25.7 billion. CEO Satya Nadella said in a statement that AI demand was driving the company's growth and that it's "why we continue to increase our investments in AI across both capital and talent to meet the massive opportunity ahead." Microsoft didn't break out how much revenue is coming from AI features in its Office 365 software, but said that corporate subscriptions from Office grew 17%, compared to 16% growth in the prior quarter. That growth was primarily driven by customers signing up for its E5 bundle, which combines Office 365 with security software and other products, and to a lesser extent from customers buying AI Copilot features in Office 365, the company said. Not including the new spending commitment from OpenAI, Microsoft said it had $392 billion in remaining performance obligations as of the end of September, also known as a revenue backlog, up from $368 billion in the June quarter. Those obligations take two years on average to become revenue, according to Microsoft investor relations director James Ambrose. | | | | YouTube announced a "voluntary exit program" allowing eligible employees in the U.S. to choose to leave the company with severance, Neal Mohan said in a memo to employees on Wednesday. Mohan also announced a reorganization that combines YouTube's product teams into three umbrella organizations focused on viewer experience, creators and subscription products. Mohan's memo was first reported by Sources, a newsletter by Alex Heath. YouTube ads brought in $10.3 billion in revenue in the third quarter, up from $8.9 billion over the same period last year, its parent company reported as part of its third quarter earnings on Wednesday. Google's subscription revenue, which includes YouTube, increased to $12.9 billion from $10.7 billion. | | | | Nvidia's market capitalization passed $5 trillion on Wednesday, about $1 trillion more than the next-most valuable company, the latest testament to Nvidia's strong position in the AI sector. After Nvidia, the most valuable company is Microsoft, which is also benefiting from its exposure to AI. Nvidia shares were up 3% to slightly above $207, giving the company a market capitalization of $5.04 trillion. Possibly helping lift the stock was comments from President Trump that he would discuss Nvidia's advanced Blackwell chips with China's president Xi Jinping when he meets him tomorrow, implying the administration might be willing to reverse the export ban on sale of those chips to China. On Tuesday Nvidia CEO Jensen Huang had given a keynote address to the company's regular GTC conference for developers and business partners, where he gave new details of revenue expectations through 2026 and talked up Nvidia's hopes of expanding into autonomous vehicles. | | | | Payments tech giant Fiserv's stock collapsed 45% on Wednesday morning after the company slashed its revenue growth outlook for 2025 and announced a management shakeup. Fiserv, whose Clover payments service competes with companies such as Square, reported 1% revenue growth for the third quarter and revised its "organic revenue growth" forecast to between 3.5% and 4% from 10% in July. On an earnings call with analysts, CEO Michael Lyons said the revised guidance was "disappointing" but said the company was taking actions to allow for a "critical and necessary reset." Lyons blamed a slowdown in Argentina, whose market had been a major driver of growth for Fiserv, for part of the revision. Lyons said Argentina had accounted for nearly half of Fiserve's growth in 2023 and more than half last year. He also said the company had used "optimistic growth assumptions in the original guidance," which were now being recalibrated. He added that he was deprioritizing "short term revenue and expense initiatives." | | | | Morgan Stanley has agreed to acquire EquityZen, a trading platform for buying and selling stakes in private companies. Terms of this transaction weren't disclosed. The deal, the bank's first acquisition under CEO Ted Pick, reflects the increasing appetite of Wall Street to invest in privately held companies. Many of the world's largest companies, like OpenAI, Databricks and Stripe, are opting to stay private for longer and command huge valuations. Founded in 2013, EquityZen said it has more than 800,000 users and has processed transactions in more than 450 private companies. Morgan Stanley is one of the largest wealth managers in the world with more than $7 trillion under management. | | | | Italian tech conglomerate Bending Spoons struck a deal to buy once-powerful internet powerhouse AOL from Apollo-owned Yahoo for an undisclosed price, adding to a recent spate of purchases by the company of faded U.S. tech firms. Reuters had reported at the start of October that Bending Spoons was in talks to buy AOL for a price of $1.4 billion. Three weeks earlier, Bending Spoons had announced the $1.38 billion purchase of video tech firm Vimeo, while in February it acquired another video tech firm Brightcove. In 2023 Bending Spoons bought faded productivity software firm Evernote. AOL was an internet giant in the 1990s, worth well over $100 billion by 2000 when it merged with Time Warner. Consumers paid a monthly subscription price to get internet access and for email and other services. But the emergence of broadband internet, replacing dialup internet services, displaced AOL. Time Warner ended up spinning off AOL, which eventually merged with Yahoo, another once-great internet service, and was acquired by Apollo in 2021. In an interview, Bending Spoons CEO Luca Ferrari said AOL generates revenue both from advertising and subscriptions. Subscribers get cybersecurity, password management and other services. AOL's revenue is roughly around $500 million annually, according to a person familiar with the finances. | | | | Sophie Boulanger, the CEO of SRTX, the Canadian manufacturer of Sheertex tights, has stepped down after less than two months on the job, according to a company spokesperson. SRTX has begun a formal strategic review of its business that could lead to a sale or recapitalization, the spokesperson said. Boulanger, who previously founded and ran a direct-to-consumer eyewear brand in Canada, took over the CEO role in September, following the departure of founder Katherine Homuth earlier this year. The Information previously reported that Homuth told staff she had stepped down from the CEO role as part of talks to secure lifeline financing for the brand. SRTX ran into financial difficulties following a costly buildout of its own manufacturing facilities and what Homuth said was increased financial pressure from the Trump administration's proposed tariffs on Canada-made goods. In mid-May, the company said it had "reached the first close" of a $40 million equity funding from investors including Canadian VC firm BDC Capital and H&M Group. The spokesperson said that Boulanger "made the personal decision to step down after helping guide SRTX through a period of transition and operational evolution following her appointment." | | | | Etsy said Wednesday that CEO Josh Silverman will become the executive chairman of the online marketplace's board, as the company tries to revamp itself amid continually declining sales. He will be replaced by Kruti Patel Goyal, a longtime Etsy executive who was previously its president and chief growth officer. Prior to that, she was the CEO of secondhand and resale app Depop, which Etsy also owns. Etsy saw its sales boom in 2020 and 2021 as e-commerce companies surged during the pandemic, but growth on its core site has flatlined since then. On Wednesday, Etsy said that its gross merchandise sales for the third quarter were $2.7 billion, an increase of 0.9% from a year ago. That increase was largely driven by Depop, which grew sales nearly 40% from the same period last year to $292 million, but is significantly smaller than Etsy's main site, which does billions in sales each quarter. The company's revenue grew 6.1% to $678 million, and net income for the quarter was $75.5 million. During his time as CEO, Silverman oversaw a range of initiatives to try to bring shoppers back to Etsy's site and fend off competition from newer bargain sites like Shein and Temu. More recently, Etsy has also leaned into the rise of AI search tools as a potential growth opportunity—it was the first marketplace to strike a partnership with OpenAI, announced last month, to allow its merchants to sell their products directly in ChatGPT. Etsy shares were down around 9% in premarket trading Wednesday. | | | | | Popular articles By Aaron Tilley and Wayne Ma
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