☕️ Meta stumbles, Microsoft soars and the Fed... well 🤦‍♂️

Howdy from Pendleton, Oregon! 👋 

And just like that, the markets are in a better mood in the early going and charting a way forward after the Fed held rates steady – although I'm not convinced they understand how real money works, but that’s a discussion for another day. 

Funny, I’m doing the same thing this morning. Charting a way forward, that is – literally. 

I’ve pulled over, partly to reroute due to the raging fires, and partly as I want to take a minute to comment on the two big earnings from yesterday and what to do next.  

Riding does that to you – it gives your brain a chance to step away from all the hype and noise and become laser focused.  

Team Nadella just showed the world why writing off Microsoft was a mistake.  

The quarter itself was a straight beat, top to bottom. (Read) 

• Revenue of $90 billion, up 18% YoY, beating estimates.
• Adjusted earnings of $4.74 a share versus the $4.22 Wall Street penciled in.  
• Operating income came in at $40.6 billion, ahead of the $39.1 billion expected. 
• Azure grew 43% — crossing $100 billion in annual revenue. First time ever. 
• Commercial backlog soared 84% to $678 billion. 

Here’s something that stood out to me.  

Copilot passed 30 million paid seats. 30 MILLION. These are actively paying customers who want real AI productivity inside the tools they already use every day — Word, Excel, Outlook, Teams, and beyond. 

That’s a jump of ~50% from Q3.  

Capex plans held steady too.  

Now come the price target raises, just as expected – from Citi, Wells Fargo and Piper Sandler. 

Ummm, yeah. 🤦‍♂️ 

A little late to the party but hey it’s good to have company.  

Shares up ~14% as I type – hooyah!  

El Zucko, however, did not impress the market.  

• Revenue of $60.80 billion, up 28% YoY and beating estimates. (Read) 
• EPS came in at $6.18, missing estimates. 
• Net income fell to $15.85 billion from $18.34 billion a year earlier ($7.14 per share). 
• Reality Labs posted an operating loss of $4.6 billion. 

Shrug. 🤷‍♂️ 

The market didn't care about any of that though.  

What it cared about was Team Zuck raising the lower end of 2026 capex guidance, free cash flow dropping an eyewatering 91% to just $784 million, and a Q3 revenue forecast that came in soft.  

Shares are down ~9% as I type.  

MyPOV: El Zucko is busy trying to convince everyone that he has a plan, but it sounds a lot like another version of bait and switch when it comes to AI and capacity to me. 

To a point I made in Tuesday's Five with Fitz,"this week will produce noise about capex, about margins, about whether AI spending is a bridge to nowhere. Some of it will be real but most of it won't." 

What to do now  

Take a deep breath. 

Seriously.  

Then remind yourself that we’re standing on the cusp of the 6th wave – one of the most transformative moments in human history. Suddenly a single quarter with headlines and online furus fighting over capex concerns feels like rearranging the deck chairs.  

There’s a lot of opportunity out there if you know where to look. I’m here if you need any help.  

Anyhoo and with your grace, I’m going to hit the road again and look forward to Apple and Amazon reporting later.  

Bottom Line 

Volatility is tough to stomach and you’re not alone if you think so.  

But the sooner you recognize it as a traveling companion rather than something to fear, the sooner (and more) opportunities you’ll see.  

Profit potential is funny that way. 

Now and as always, let's MAKE it a great day! 💯 

You got this — I promise! 

Keith 😀