Meta and Microsoft exceed earnings expectations, boosting stock prices and advancing AI strategies

    by VT Markets
    /
    Jul 31, 2025
    Meta’s revenue for the quarter hit $47.52 billion, up 22% from last year and exceeding expectations of $44.8 billion. Earnings per share were even better than forecasted, reaching $7.14, a 38% increase compared to the projected $5.90–$6.00. Ad revenue grew by over 21%, with user growth steady at 3.48 billion daily active users. Meta updated its Q3 revenue outlook to about $50.5 billion and raised its full-year capital expenditure to $72 billion. As a result, the stock rose by 11.62% to $775.88.

    Strong Performance from Microsoft

    Microsoft also reported impressive results, with revenue of $76.44 billion, an 18% increase from last year. Its earnings per share were $3.65, higher than the estimated $3.35 and a 24% year-over-year rise. Demand for Azure, driven by cloud and AI services, spiked over 30%. For the next fiscal year, Microsoft plans to invest $120 billion in capital expenditure, up from $88 billion last year. The company’s stock hit a record intraday high of $555.45 before closing at $536, a 4.6% increase. Its market value briefly exceeded $4 trillion, right behind Nvidia. Although Meta and Microsoft are both players in AI, they have different focuses: Meta is centered on social media and advertising, while Microsoft excels in enterprise software and cloud services. They lead the AI market but don’t compete directly like Meta and Google or Microsoft and Amazon Web Services.

    Implied Volatility Decreases

    The strong earnings from Meta and Microsoft confirm that AI spending is more robust than ever. This trend is translating into real revenue and profits. We’re noticing implied volatility drop, with the VIX recently hitting a 12-month low of 11.5, indicating that traders feel confident and are not worried about a sudden downturn. With Meta’s shares breaking the $748 resistance level, this mark becomes an important support point. A similar breakout occurred in late 2024, which led to a sustained 15% rally over the next month. Selling put spreads for August or September with a short strike around $740 could be a strategy to earn premiums while betting that this new support holds. Microsoft’s push above its previous $518 high is a significant bullish sign, despite a slight pullback from session highs. The options market confirms this with call volume for August more than double the daily average, showing strong bullish interest. Selling puts below the new $518 support level seems like a smart move, capitalizing on the increased confidence. The large capital expenditure announcements are viewed as a sign of strength rather than a cash flow burden. Together, Meta and Microsoft are investing nearly $200 billion this year, reinforcing their positions as industry leaders. For options traders, this means we can expect higher implied volatility around future earnings dates, creating opportunities for strategies like straddles if big moves are anticipated. While the trend appears to be upward, it’s crucial to monitor those breakout levels closely. If Meta fails to hold $736 or Microsoft drops below $518, it could signal that this rally is losing momentum. This would be a good time to consider taking profits on bullish positions or even starting small, short-term bearish plays. Create your live VT Markets account and start trading now.

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