Meta And Microsoft Earnings Roll In, GDP Drops, And Tariff Impact On Retail 04/30/25

0:02Live from the Nasdaq market site in the heart of New York City's Times Square, this is Fast Money. Here's what's on tap tonight. A massive night of earnings. Microsoft, Meta, Qualcomm, and Robinhood. Just some of the names reporting in the last hour. We'll go inside the numbers, give you the latest headlines from the calls. Plus, tracking prices. A new report detailing how retailers from mass market to haute couture are handling tariffs. Just how much should you expect price tags to increase? And decaffeinated shares of Starbucks hitting their lowest level since Brian Nichols was announced as CEO.

0:31Can the turnaround specialists perk things back up? or are there more jitters ahead? I'm Melissa Lee coming to you live from Studio B at the NASDAQ. On the desk tonight, Steve Grasso, Karen Feinerman, Dan Nathan, and Guy Adami. And we start off with a supersized slate of earnings tonight. Meta and Microsoft higher after their prints, while Qualcomm and Robinhood are both moving lower on their results. Full team coverage on the reports, Kate Rooney on Robinhood, Pippa Stevens on Qualcomm, Julia Borson tracking Meta. But we start off with Steve Kovach at Microsoft. The call kicking off in less than 30 minutes' time.

1:00Steve. Hey, Melissa. So, yeah, ahead of that call, we got some solid beats here with Microsoft's report, with Azure growth being the real standout. First of all, you got EPS beating by 24 cents,$3.46 a share, and revenue a beat as well,$70.07 billion, up 13 % from the year-ago quarter. And then there's Azure, of course, that big bright spot in the report that's sending shares up 6%, growing 33 % year-over-year, beating expectations of 30 % growth. And within that Azure growth number, 16 percentage points of that growth came from artificial intelligence. That's up from the 13 % a quarter ago. We just see that continue to climb and take up a bigger chunk overall of the total Azure growth.

1:44So that is the old news, the new news coming up on the call at 530. Here's what you should be watching for. First of all, guidance on Azure cloud growth. Given all this economic uncertainty we're talking about, we might see Microsoft work with customers like they did back in 2022 to save cloud computing costs. That, of course, hurts the growth rate of Azure. And then there's CapEx. We just heard Meta is raising its AI CapEx for the year, and we know Microsoft has been pulling back in recent months. So we'll be paying attention to CFO Amy Hood's guidance on what CapEx will look like in the fiscal year, which beyond the fiscal year, rather, that ends in June, Melissa.

2:21All right, Steve, thanks. Keep us posted that call again. 28 minutes time will get underway. Looks good right now. Things could change dramatically in a half an hour when that call starts, when we get that guidance. Guy, what do you make of the quarter? It often does. But, I mean, I think people, collective sigh of relief, Azure growth, half of the growth is AI, good for them. This level now, 419, 420, gets us back to where we sort of fell off the cliff from back on February 20th or so. But back of the envelope, you do all the math, and, yes, it's a nice little move off that recent low we saw a couple weeks ago.

2:49So, you know, you solve a company just regardless of what they say, trading close to 29 times next year's numbers, which is cheaper than it's been, but expensive historically. You know, it's interesting when Google reported on Thursday afternoon, there were things that you could pick out a little bit. But, you know, the stock was trading higher, 5 percent in the aftermarket. I think a lot of that had to do probably with low expectations here. I think you could say the same thing for Microsoft. I think that everyone's focused on that Azure growth. Again, let's see what the guidance is. I'd also mention that, you know, a lot of the story leading up to the core weave, you know, IPO, I want to say last month or so, was that Microsoft was canceling some data center leases.

3:24I wonder if they were moving some workloads, you know what I mean, or they basically had more capacity on Azure for that 50 % of their business that is AI. So that could be really interesting. I guess the most important thing on the Q &A is, like, what sort of uptake are they getting for their, like, AI agents, for Copilot and the like that they're putting out there? Because that's a really important part of it as you think about this story broadening out. So, again, I don't think there's anything to kind of knock right now. I think it's right where Dan left off. There's nothing to knock right now.

3:53This sort of gives a soothing sense to the overall market that it's not as bad as we thought. Whether the spend is still there. Matter, we're going to hear about ad spend. The price target on Microsoft, the consensus price target is, I think,$495. So we've got about 20 % more to the upside there. If they continue to spend, the market's OK. Market is 40 % made up of the large cap tech names. So I'm most interested. We heard that they were cutting back on data centers. Data centers was 88 % of NVIDIA's revenue last year. Are they doing it for real? And how much impact is going to be on NVIDIA? Most important thing.

4:36Could you see Nvidia stock move down, as I've been thinking? Nvidia has been blessed with the overall rally in the market. It's dipped off that$90 basically support level. But there is a thesis where Nvidia can make less money and the others make more money. And I don't think anyone's priced that in. Where the market's still OK, but Nvidia suffers, it's pulled out. You're reading through. And the other read through will be probably coming on the conference call. any sort of commentary on enterprise, you know, right? I mean. It was good. Well, are you talking about, well, Dynamics 365, which is their ERP, which competes with the Salesforce and Oracle, that was a nice beat.

5:17And if you look, Salesforce is up nicely in the aftermarket. So, you know, we talked about with Alphabet, was it better than feared? This was dramatically, I thought, better than feared. Better than feared, yeah. Yeah. And so, you know, that Azure growth we talked about, that was significantly better than feared, I think. Yeah, I mean, that was what bombed the stock in the last earnings report. I mean, the bulls would have said going into this report, into the Microsoft report, that it was very much de-risked in terms of the story because of the decline from that quarter in terms of Azure. The bar was much lower in terms of expectations.

5:49The bar was much lower, exactly right. And if you go longer term, I mean, it's still important, I think, to point out that, you know, this is a good quarter. Back to where I pointed out we were in February. But this was a stock that topped out in July of last year on a broader market until the last month or so that's done extraordinarily well. So I think finally valuation just sort of caught up. And despite the quarter, despite the growth, I mean, anything north of 25 times for Microsoft is historically pretty expensive. Now you could say, you know, they've shifted their business. They deserve a premium multiple.

6:19Maybe, but it is expensive. And back when it did top out in July of 2024, it was a$468 stock when it topped out with consensus, as I said, up to$500 now,$495. So people are just throwing that out the window and thinking there are better times ahead, which is unique from everything that we've seen in the last two months. All right. So the stock is up almost 6 % in the after-hour session. Again, the conference call gets underway 24 minutes' time. Meantime, let's get to Meta. Shares are surging after the company posted a top-and-a-bottom-line beat. The conference call kicked off at the top of the hour.

6:49Julie Borson's got the details. Hey, Julia. That's right. Mark Zuckerberg kicking off the call just moments ago, saying that the company is well positioned to navigate macroeconomic uncertainty and that the major theme for Meta is how AI is transforming everything they do. That's why he says they're increasing their investments in AI to pursue five major opportunities. Improved ads, more engaging experiences, business messaging, Meta AI and AI devices. Now, to fund that, Meta is increasing its fiscal 2025 CapEx to a range of$64 billion to$72 billion, up from a prior outlook of$60 to$65 billion.

7:26Saying, quote, this updated outlook reflects additional data center investments to support our artificial intelligence efforts, as well as an increase in the expected cost of infrastructure hardware. Now, in terms of Metascore's business, 41 % margins far exceeded the 37 % street account estimate, and that was driven in part by a 10 % increase in ad prices from a year ago. The call is ongoing. We're going to be listening closely for any indication from Zuckerberg about economic uncertainty impacting ads and particularly what they're expecting out of China. Back over to you, Melissa. All right, Julia, thank you.

8:03Julia Borsten. Karen, a lot to like here. A lot to like, yeah. I mean, they beat on so many metrics that operating income. That was a really big beat. Julia touched on the 10 percent growth in ads. If you want to nitpick at something, it would be the 5 percent ad growth where the street was expecting a little bit higher than that. The CapEx actually for this quarter was a little bit down versus consensus. But we know we think it will be up. You know, I'm always afraid to get too excited because they have that call starting just a few minutes ago. Sometimes they drop a bomb that we're not really expecting.

8:33But there was really a lot to like here. And I think that the stock had sold off so much since the last quarter that the risk reward was pretty compelling going in. I'm actually surprised it's not a little bit higher. Does the raise in the CapEx midpoint range guy, sorry, I'll take it, give you some ability to let go of that AI spending is going to be down? Not yet. This is going to surprise you. I have a cynical take about this. Silver linings guy. No, yesterday, Trump saying a hostile and political act to Amazon. All of these companies that we're talking about are in the sights of regulators.

9:15We've been hearing about Google and the potential for remedies and the like. And so when I think about this and I think about commentary, I don't think for a second this is lost on these CEOs. All these CEOs who rushed down to Mar-a-Lago and gave money personally and from their companies to the inauguration. So, again, you get a shot across the bow like that yesterday and you see a company like Amazon turn about face like that, it's going to raise the antennas of Zuckerberg and of Satya and some of these other folks. Volatility in this name is unbelievable. This was north of$700. I think it was a$480 stock a couple weeks ago.

9:48You see where it's trading now. I'm with Karen on this. I mean, this quarter, theoretically, given the move that it's had up and down, I think it should be higher than this. Now, we'll see. You know, maybe it's just early. People get their footing. But this quarter suggests it should be doing better than it's doing. Same theme. They're working on a proprietary AI training chip that they're doing it with Taiwan Semi. They're not doing with NVIDIA. Last year, they made up 13 percent of NVIDIA's revenue. So if there's any pullback, whether it's incremental or exponential, it's going to affect NVIDIA.

10:21That's two companies out of the four that make up all of their revenue. One thing that's a little disappointing in my portfolio, the Google response here, right? It's up not quite what it, percent and a half, not very much. What do you think that is? I mean, is it the overhang of all the regulatory, the trial, the outcome? I guess. You would think with this Microsoft Azure numbers, it would be better. But I do think that is such an albatross of we don't know how to evaluate it. Right. The existential risk. See, Google should be trading so much better, given the quarter we just saw, given what's going on over the last 10, 15 minutes or so, given the broader market's getting on its horse a little bit, and it's not.

11:03And you wonder why that is. And maybe that existential risk that, again, to bring up Ben Wright, he's brought up a month and a half or so ago, that's what's weighing on the market right now. Meanwhile, President Trump speaking at an Investing America event. NVIDIA Jensen-Fong saw thanks to Masayoshi Son, IBM's Arvind Krishna, GE Aerospace's Larry Culp, all in attendance. We will monitor it. We'll bring you all the headlines, of course. But let's, in the meantime, check in on the markets today. Stocks staging a late-day rally that sent the Dow and the S &P into the green at the close. The two indices both now riding seven-day winning streaks.

11:32The Nasdaq slightly lower, but well off the nearly 3 percent loss it saw early in the day. The initial sell-off coming after new GDP data showed the U.S. economy unexpectedly contracted in the first quarter. Economists were expecting 0.4 percent growth. And a price index within that report found inflation accelerated to 3.6 percent, raising concerns of stagflation. Crude oil dropping on fears slower growth could lead to drop in demand. WTI settling below 60 bucks a barrel. It's lowest in over four years. And Treasury yields initially spiked as investors fear higher prices would delay rate cuts from the Fed.

12:05So how worried are you now? How much more worried, perhaps, are you now? Well, it's the inflation component. I mean, the slowdown, I mean, it's going to get messy over the next couple of quarters in terms of the pull forward. Then is there going to be demand on the back end and all those things? So I expect that. But the inflation component, I think, should startle people a little bit. And quite frankly, I'm surprised yields can go a lot higher on the back of that. So should you be worried? Yeah, if the job number comes in horribly, which it could, given all the jolts data we've seen recently, then that you just said it.

12:36I mean, there's your stagflationary environment, Mel. Well, we talked about it on the midday call about if we have a jobs number that isn't good, then I think that would give the Fed the reason to go. And maybe that's enough of a put under the market. I don't know. We talked about the Trump put. Is there the Fed put, which has been absent? So this is, you know, when we play that game, it's not would you rather. It's if you told me what it was. What would you? I still wouldn't know. I wouldn't know. I wouldn't know on a bad jobs number. Yeah, but, you know, when you look at this, the core PC has come down.

13:07It's moving in the right direction. And income has been decelerating. So I don't think that we're worried about that just yet. I am worried about jobs. And I think that dual mandate, the jobs has to take precedent. I think you're going to see inflation come down. And OPEC Plus is adding 411 ,000 barrels per day in May and probably extending that until September. That's a ton of supply on the market. They're trying to keep their market share from the U.S. suppliers. When you talk about you think inflation is coming down, you're specifically talking about energy prices, not anything else, not goods, not services.

13:44I mean, services are a problem. I think energy will come down. And I think housing, if there's they're factoring in four cuts now. So four cuts from basically people thought maybe two or maybe one or maybe none. Now, to Karen's point, maybe you have the Powell put back in. If there's going to be four cuts and they maybe start in July, I think we're still I think the market is always pricing ahead, not seeing what they see now. Yeah, I think what's different this time. I love that saying. Right. is pretty good. I just don't think anyone knows what should be done if you have a weakening jobs market, if you have an economy that is, you know, it's just kind of hanging in there.

14:21I don't think that, you know, Microsoft and Google and Meta are really reflective of the economy, right? Like, for all intents and purposes. So if you get a weak jobs number and then you have increased pressure over the weekend on Powell, that came back pretty quickly, right, over the last few weeks or so, or last few days, excuse me. I think the playbook for a weakening economy and a weakening jobs market doesn't really work right now. And Guy made this point, I want to say a few months ago, when the Fed was worried about jobs and they were worried about maybe a stagnant economy, they were less worried about inflation, they cut in September 50 basis points.

14:54And then they cut 25. And then 10-year went up. And it really didn't accelerate growth. What did we talk about the lag, the long and variable lags of monetary? I just don't know what a cut would do right now, given the uncertainty about trade, given the uncertainty, not just with China, obviously. It's always psychological, though, right? I mean, the Fed's action, like the market reaction is immediate because... Can I tell you something? I remember the second day of 2001, okay? And I know that you got to go all the way back here. And the Fed had a surprise rate cut. And there was this initial reaction where everyone panicked to buy things, to cover shorts and buy things.

15:27It did not take long for whatever that initial joel was, we were making new lows. And in many ways, you know, it could signify some sort of panic, right? And if you're doing the thing because you're going up... I think what he has to do, I understand your point and I agree with your point. I think what he has to do is he's got to stop the roll off of 35 billion of MBS mortgage backed securities off the Fed's balance sheet that puts upward pressure on mortgage rates. That's the first thing that he should do is stop that runoff and see what happens to mortgage rates. Housing is a tremendous part, a third of inflation.

16:00I don't know. I mean, I think there's so much involved in the housing side of the equation that it's very difficult to say what the Fed will do will then make people who have a 3 % mortgage move out of their homes. And you know who doesn't know how to do it? The Fed doesn't know it. No one knows how to do it. But I mean, like people have 2 % mortgages at this point. But we know, yeah, it's 60 % of people are locked into a mortgage. You own a mortgage, you don't own a home, and it's the existing home sales that are locked up right now. MBS rolling off is bona fide putting upward pressure on mortgages.

16:31But if we see the labor market start to weaken, I think people would be less confident going out to buy a house. They've been waiting for supply to come on. Maybe it does. It doesn't matter if the Fed cuts. It doesn't matter if the Fed cuts. And what happens then? Housing prices come down. What happens then? Inflation prices. If you're out of a job, are you going to buy a house? It doesn't happen that way. We're at historic low unemployment. We're talking about what's palatable for the Fed right now. Six percent unemployment is not palatable, but still, historically, six percent unemployment is pretty low.

17:03I get what you're saying. Well, people feel it, even if it's from a historically low level. I'm not being callous. I'm not being callous. I get it. But one of the things about this potential labor recession, if there is one, is that it is more white collar jobs. Right. And that because of various reasons that they sort of, you know, the blue collar jobs are still there or maybe even increasing potentially. But the white collar jobs is that, you know, percentage of those people that are buying a house, if they get concerned, then I think. Yeah, well, you're right. Prices will go down. Nobody to buy, though.

17:36Coming up, we'll keep an eye on all of the after-hours movers. Microsoft's conference call kicking off in about 10 minutes. We'll bring you all the headlines plus the details out of Qualcomm and Robinhood. Next, in a deep dive into retail, the sector adjusting to Trump's tariff policies. Just how high are prices going on clothes, toys, handbags, and more? Don't go anywhere. Fast Money's back in two. This is Fast Money with Melissa Lee. right here on CNBC.

18:12Welcome back to Fast Money. Qualcomm sharply lowered despite posting a top and bottom line beat. The chipmaker issuing light revenue guidance. The call is underway. Our Pippa Stevens has been listening in. She joins us now at the very latest. Hey, Pippa. Hey, Melissa. So Qualcomm is under pressure after their guidance didn't blow the street away, just in line on the top line. if you take the midpoint of the range. Now, on the call just now, the CFO pointing to uncertainty around the impact of the global trade landscape, saying their guidance is based on their current assessment of the financial impact of tariffs as they stand today, but did say that ultimately they don't see any material direct impact at this point, saying their diversified global supply chain sets them up well.

18:49The CEO also laying out some of Qualcomm's latest technical achievements and updates from partners like Microsoft, whose products are using Qualcomm's Snapdragon platform. Now, on that guidance front, the chip business is performing well, although the licensing business is facing some weakness, with Qualcomm guiding that division's revenues between$1.15 to$1.35 billion, while Wall Street was looking for$1.31 billion. Melissa? Pippa, thanks. Pippa Stevens didn't seem too bad, Guy. No, it's not. And this is, by the way, I mean, pull up a chart of this stock. It has not, listen, it's bounced recently like a lot of these things, but it has not traded well now for the last few months.

19:27And you just sort of do back of the envelope math and say, okay, what am I missing here? Yeah, it was not too bad. Valuation is, in a word, compelling. I just don't really get it. I don't know what the street is looking for. Maybe it's just as easy as dollars flowing into one and flowing out of another. But Qualcomm, to me, looks pretty cool here. You know, the headline that stuck out to me, and again, this is a company that has activists all over it. They were giving a lot of, you know, money back to shareholders, that sort of thing. They said they're going to use 100 percent of their free cash flow for buybacks and the like here.

19:56So I thought that was interesting. But on the flip side of that, Apple is a 22 percent customer. Samsung's a 19 percent customer and Huawei is 12 percent customer. So, you know, we know those are the handset makers. We know that they sell in a lot to them. We know that Apple is trying to kind of boot them out, doing some of their own custom stuff. So, you know, to me, it just seems like one of those ones to Guy's point. It's cheap. It's you know, the numbers weren't that bad. If investors don't care, then they don't care. They just think it's a value trap. And, you know, hardware is harder than, let's say, software right now.

20:23So it'll be interesting to see what Apple has to say tomorrow night. Qualcomm always falls into that bucket of trying to get investors' attention. Did I see that right? Revenue was up 17 % versus expectations of 3.1%. And then the return on invested capital is 52.8%. That blows away the average in the semiconductor space. I agree with the guy. But if a tree falls in the forest, to Dan's point, no one's around here making noise, then no one cares about the stock. but I would be a buyer of Qualcomm off of this. Even if nobody sees it? I mean, I'm in the woods. I got an axe. I got an axe. I chop my own wood.

20:56Coming up, more earnings action on deck. The big numbers from Robinhood. And look at the headlines out of Meta's and Microsoft's conference calls. Plus tariffs hitting the big retailers. What it means for your wallet and the stocks. You're watching Fast Money live from the Nasdaq markets and in Times Square. Back right after this.

21:38We'll be right back. ever. So to find out how to navigate this wild market environment, get your tickets now. Just scan the QR code or go to CNBCevent.com backslash fast money. Welcome back to Fast Money. We are getting comments from Meta CEO Mark Zuckerberg on the company conference call. Deepwater managing partner Gene Munster has been listening in. He joins us now. Gene? Melissa Zuckerberg is on cloud nine, and the reason is that he raised guidance by 3%, but these AI tools are having a huge impact in terms of how customers are using them, increasing engagement by 7 % to 30%. And so he's on cloud nine, they're going to be continuing to invest aggressively in AI.

22:24And I think that point about the engagement increasing around AI is really important because as we look around and ask the question, how is AI, what's the return on investment on AI, Meta is actually showing tangible examples of that. Increasing revenue, they lower their total expenses for the year by 1%. And so this company is in a unique area where it's actually having this benefit from AI. And so that's coming through loud and clear from Zuckerberg on the call. Karen's got a question. Yeah. Hi, Gene. Thanks for being on. Do you think they talk about a little bit increase in CapEx? And do you think that's, is that part of why the stocks up?