Before the bell: Records everywhere

Across equity markets, commodity markets and corporate earnings, investors are being flooded with new records. Later today, markets will react to the results from Meta, Tesla and Microsoft. Read here how they performed.

Which record should we focus on first in today’s newsletter? The gold price, which surged another 5% this morning toward 5,600 dollar per ounce? Copper futures jumping 6.8% to a new all-time high? Or the S&P 500, which closed above the 7,000-point mark for the first time yesterday? There are simply too many to choose from.

Records are also being broken at company level. Microsoft posted a new revenue record yesterday, with quarterly sales rising 17% to 81.3 billion dollar. Yet the stock slipped in after-hours trading, as investors had hoped for even stronger growth at Azure. The cloud division “only” grew 38%. Bloomberg also reports that Microsoft, together with Nvidia and Amazon, is in talks to invest as much as 60 billion dollar in OpenAI.

Meta, meanwhile, set a new user record last year with 3.58 billion daily active users. Capital expenditure is also rising to a new high. Meta expects to invest between 115 and 135 billion dollar in 2026, compared with 72 billion dollar in 2025. These investments are intended to accelerate the development of superintelligence. Tesla, too, plans record investment spending in 2026. The company aims to invest 20 billion dollar in capital expenditure for self-driving cars and robotics, and also announced a 2 billion dollar investment in xAI, the artificial intelligence company of CEO Elon Musk.

In Asia, South Korea’s Kospi index rose 1.1% this morning to a new record. Samsung Electronics’ chip division exceeded expectations with profits more than quintupling in the past quarter. In Indonesia, the sharp market correction continues. The Jakarta Composite Index fell another 5.9%, following a 7% drop yesterday, forcing another temporary trading halt. In Europe, ING reported strong quarterly results this morning. Revenue rose 7% to 5.8 billion euro, while profit jumped 22% to 1.41 billion euro, well above expectations. Later today, quarterly results are also due from Mastercard, Caterpillar, Apple and Visa.

Investors are asking the impossible

What stands out more and more this earnings season is that investors are holding expectations that are difficult to reconcile with the laws of physics. At Intel, investors were expecting results that simply were not achievable with the company’s current production capacity. The same appears to be happening at Microsoft. Azure grew a solid 38% in the past quarter, an impressive performance in its own right, yet investors remain unconvinced. During the analyst call, Morgan Stanley analyst Keith Weiss noted that the stock was trading almost 5% lower after hours and that Azure may have grown slightly slower than hoped.

Chief financial officer Amy Hood responded by suggesting that Microsoft might need to provide a table showing the maximum growth achievable within existing capacity. Had Microsoft allocated all available chip capacity exclusively to Azure, growth would have exceeded 40%, according to Hood. That would, however, have come at the expense of other divisions within the group. In other words, investors are gradually developing expectations that may be too high. Our view? With revenue growth of 17% to 81.3 billion dollar, well above expectations, and earnings per share up 24% to 4.24 dollar, Microsoft investors have little reason for concern for now.

If you pay peanuts, you get monkeys

When you reach 3.58 billion users every day through your social media platforms, you are sitting on a gold mine. That is precisely the position Meta Platforms finds itself in today. Thanks to this network, the company can deliver ads deep into the living rooms of its users on a daily basis, and it monetises that reach very effectively. This was once again reflected in the quarterly results published after the close on Wednesday. The stock jumped 6% in after-hours trading after revenue for the quarter came in at nearly 60 billion dollar, a 24% increase and above analyst expectations. Earnings per share also surprised on the upside at 8.88 dollar, compared with a consensus estimate of 8.19 dollar.

The figure that really stands out, however, is planned capital expenditure. CEO Mark Zuckerberg intends to invest between 115 and 135 billion dollar this year, partly to fund the development of superintelligence. For comparison, that is almost ten times what Meta invested in the same period in 2020. Zuckerberg clearly understands that quality comes at a price. As the saying goes: if you pay peanuts, you get monkeys. And in the race toward superintelligence, it pays to spend a little extra.

Did you know…

that Mark Zuckerberg is married to Priscilla Chan, an American paediatrician of Chinese-Vietnamese descent? The fact that Meta’s earnings per share came in at 8.88 dollar carries special significance in Chinese culture. The number 8 is considered the ultimate symbol of prosperity, wealth and good fortune, as its pronunciation closely resembles “fa,” meaning to become wealthy. In China, this could be interpreted as a powerful wish for extreme wealth (fa, fa, fa).