Before the bell: US big tech continues to grow at an extraordinary pace

Meta is (still) not benefiting from AI because it doesn’t sell cloud services. Alphabet is the fastest grower. Five years after filing its request, Belgian biotech firm Biotalys finally gets approval to launch its crop protection product in the US.

Last week it was the turn of the major US big-tech companies to present their quarterly results. They were exceptionally strong, pushing the already highly valued Nasdaq up another 2.2%, making it once again the best-performing market of the week. From Microsoft to Alphabet, both revenue and profit continue to expand at a rapid pace—and that momentum is actually accelerating. On Friday, Amazon (+9.6%) also delivered an impressive report. The market leader in cloud subscriptions increased quarterly revenue from that business by 20% to 33 billion dollar. The strongest climber, however, was Alphabet, which saw cloud revenue jump 34% to 15 billion dollar, making it number three after Microsoft. Meta was the only big tech stock to be punished after its results, even though its 20% revenue growth was objectively strong. The difference with the other firms is simple: Meta does not generate external cloud revenue, even though it spends just as many billions on artificial intelligence. The AI boom is therefore still mostly a cost item for Meta, because unlike the others, no meaningful income is flowing in—yet.

In Japan, trading starts after a holiday, and there is little movement in China. In Brussels, all eyes are on Orange Belgium after the French parent launched a takeover bid for its Spanish subsidiary on Friday. The failed bid for the Belgian unit was priced at 22 euro; Orange Belgium closed Friday at 19.10 euro. Ryanair raises its outlook this morning. In the Netherlands, PostNL posts a quarterly loss. In the US, Palantir reports after the bell.

A sharp rally makes investors nervous

At first, the damage to UCB’s share price was limited, but on Friday the stock suddenly fell 6.4%. Weekly prescription data for growth engine Bimzelx reportedly disappointed. Jefferies had already downgraded the stock to “sell” earlier in the week. That call carries extra weight because the same bank was among the very first, years ago, to put UCB on the map with a strong buy recommendation. Not unimportant: the analyst who issued the sell rating is not the one who originally championed the stock. Of course, the share price has already tripled, and at roughly 30 times expected earnings it looks expensive. Earnings will more than double, however, and are expected to grow by double-digit percentages for years. In the first half of the year, Bimzelx generated 799 million euro in revenue, while analysts project peak sales of around 6.5 billion dollar. UCB also published three-year trial data last week—barely noticed—which again confirmed Bimzelx is among the best in its class. Interesting side note: Tubize, the holding company above UCB, fell less than UCB itself.

The G stands for “Geduld” (patience) at Biotalys

Finally—almost five years after its initial application—Biotalys has received a positive opinion from the US Environmental Protection Agency (EPA) for approval of Evoca, a biotech-developed crop protection product that can replace pesticides. In the first phase, it may be used for strawberries, tomatoes and grapes. Like Ablynx and Argenx, Biotalys is built on the immune system of camelids. The potential is huge, especially because Biotalys has a platform capable of developing additional applications using the same technology. In that light, today’s market value of just over 200 million euro looks extremely low. At the same time, there is still a long way to go: true commercialisation is only expected in a few years, and the company will need to raise fresh capital by mid-next year at the latest. A small position could make sense for investors who have patience and a long-term horizon.

Did you know…

that in Estonia, almost all taxes have a flat rate of 22%? The rate applies to wages, dividends, capital gains and corporate income—no exceptions, except VAT, which has just been raised from 22% to 24%.