Before the bell: Focus on Meta and Microsoft Earnings

Today, investors are mainly focused on the earnings reports from Meta and Microsoft. Starbucks disappointed with its results, while Melexis and Ontex also posted weak numbers

With Meta and Microsoft reporting after the bell tonight, investors are set to gain more insight into the quarterly performance of Big Tech. Both companies are expected to be relatively unaffected by the trade war—though daily reports continue to reveal far-reaching impacts. Super Micro Computer announced that customers are postponing orders, causing revenue to fall to 4.5 billion dollars—1 billion dollars below expectations. Snap Inc., parent company of Snapchat, withdrew its guidance, citing macroeconomic uncertainty and its impact on advertising revenue. General Motors and JetBlue Airways also withdrew their outlooks, and United Parcel Service plans to cut 20,000 jobs this year. Meanwhile in China, factory activity showed its steepest decline since December 2023. Samsung shares dropped as chip sector profits fell 40% due to U.S. trade sanctions.

In Belgium, Melexis released a disappointing quarterly report, with profit margins coming in below analysts’ forecasts. The company expects first-half operating profit to be about 50% lower than last year. Diaper maker Ontex also reported weaker revenue and profit due to sluggish market demand. Meanwhile, Marc Coucke officially launched a takeover bid for Smartphoto, offering 28.50 euro per share. Later today, markets will closely watch U.S. inflation data and GDP figures. Caterpillar will also release its earnings this afternoon, though all eyes will be on Microsoft and Meta.

Bills Still Need to Be Paid—Even in a Crisis

Defensive investors may want to consider companies less affected by the ongoing U.S. trade war. Payments giant Visa fits the bill: even during a trade war, the bills still need to be paid. This was reflected in its latest earnings report, which investors will digest today. Net income rose 6% to 5.44 billion dollars, with adjusted earnings per share at 2.76 dollars, beating expectations of 2.68 dollars for the quarter ending in March. Visa processed a staggering 3.34 trillion dollars in payment volume, slightly below the anticipated 3.42 trillion. To sweeten the deal for investors, Visa also announced a new 30 billion dollar share buyback program. For now, the outlook for investors looks solid.

Weak Brew at Starbucks

We previously noted during our travels that Starbucks locations seem to be drawing fewer customers. That gut feeling now aligns with the numbers. Revenue and profit both fell short of expectations, with revenue down 1%—marking the fifth consecutive quarterly decline. The coffee giant faces challenges including price hikes and boycotts related to its stance (or lack thereof) on the Middle East conflict. Economic pessimism among U.S. consumers is also playing a role, as the weak figures are concentrated in Starbucks’ home market. New CEO Brian Niccol, who took over in September, is working on a turnaround plan. Our take? Starbucks’ moat isn’t as strong as it used to be. We often prefer Café Amazon, a Thai competitor owned by PTT Public Company and listed on the Thai stock exchange. Nothing beats a good Thai iced coffee.

Did You Know…

that Starbucks has faced mounting backlash after choosing to remain politically neutral on the Gaza conflict? Critics accuse the company of siding with Israel, interpreting its neutrality as an admission of guilt. The boycotts have now lasted several quarters.

This article was translated from Dutch and was originally published on Spaarvarkens.be.