Wall Street punishes Alphabet and Microsoft despite earnings beats after stocks hit record
Google CEO Sundar Pichai speaks at a panel at the CEO Summit of the Americas hosted by the U.S. Chamber of Commerce on June 09, 2022 in Los Angeles, California.
Anna Moneymaker | Getty Images
Results were good, but not good enough.
That’s Wall Street’s reaction to quarterly results on Tuesday from Alphabet and Microsoft. Both companies reported revenue and earnings that exceeded estimates, yet the stocks sold off in extended trading.
In investor speak, the stocks were priced for perfection. Alphabet shares are up 56% for the year and climbed to a fresh high last week, exceeding the prior record from late 2021, the peak of the tech boom. Microsoft is up 70% over the past 12 months, also reaching a fresh high recently and surpassing Apple as the most valuable publicly traded company.
The companies generated excitement last year by riding the artificial intelligence wave, and were also lauded by shareholders for their dramatic cost-cutting efforts, which included eliminating thousands of jobs.
In the weeks heading into their earnings reports, investors were buying as if they expected positive surprises. They were left disappointed and nitpicking the numbers.
Alphabet on Tuesday reported 13% revenue growth, the fastest rate of expansion since early 2022. Sales of $86.31 billion topped the average estimate of $85.33 billion, according to LSEG, formerly Refinitiv. Earnings per share of $1.64 beat estimates by 5 cents.
Revenue at Microsoft increased 18% to $62.02 billion, topping the $61.12 billion average analyst estimate. EPS of $2.93 was 15 cents above consensus.
Both companies also beat expectations in their cloud businesses, with Google Cloud reporting 25% growth and Microsoft’s larger Azure and other cloud services expanding by 30%.
The one disappointment from Alphabet was in Google’s ad business, which delivered revenue of $65.52 billion, trailing analysts’ estimates of $65.94 billion, according to StreetAccount. Within ads, YouTube came in just shy of expectations.
Stifel analysts, who recommend buying the stock, said in a quick-take report on Tuesday that Alphabet produced “healthy advertising results, but not enough.”
Brian Wieser, an analyst at media and advertising consultancy Madison and Wall, said the market has unrealistic expectations for Google given its size and dominance.
“In my general conversations with public market investors and sell-side analysts, few have a correct view of the advertising market,” Weiser said. “Many think that growth can continue at double-digit levels for the fastest-growing companies for much longer a period of time than is realistic to expect.”
Alphabet shares dropped almost 6% after the report. Microsoft’s drop was less severe. The stock initially fell by more than 2% and then pared some of its losses.
Microsoft’s outlook was a bit light, overshadowing the earning and revenue beat. The company called for fiscal third-quarter sales between $60 billion and $61 billion, while analysts polled by LSEG had expected $60.93 billion.
Shares of chipmaker AMD also dropped despite better-than-expected revenue numbers and profit that met estimates. The stock, which is up 137% in the past year on excitement about its artificial intelligence processors, fell almost 6% after the announcement.
Attention now turns to Thursday, when Amazon, Apple and Meta all report quarterly results. Like Alphabet and Microsoft, Meta shares have climbed to a record this month. Apple hit its all-time high in December, while Amazon remains about 6% below its record from 2022.
—CNBC’s Jonathan Vanian, Jordan Novet and Kif Leswing contributed to this report
Signage at eBay headquarters in San Jose, California, U.S.
David Paul Morris | Bloomberg | Getty Images
Shares of eBay popped 10% in extended trading on Wednesday after the online marketplace posted stronger-than-expected results for the second quarter, and offered an upbeat forecast for the current period.
Here’s how the company did in the second quarter compared to analyst estimates compiled by LSEG.
- Earnings per share: $1.37 adjusted vs. $1.30 expected
- Revenue: $2.73 billion vs. $2.64 billion expected
GMV, or the dollar value of items sold, grew 6% year over year to $19.5 billion. That topped analysts’ projected $18.9 billion, per StreetAccount estimates.
For the third quarter, eBay said revenue will land between $2.69 billion and $2.74 billion, above Wall Street expectations for $2.66 billion. The company also guided for adjusted earnings per share of $1.29 to $1.34. Analysts anticipated $1.31 per share.
EBay said third-quarter GMV would be in the range of $19.2 billion and $19.6 billion, which was higher than consensus estimates of $18.8 billion.
GMV guidance “contemplates potential disruptions from impending tariffs and the potential elimination of remaining de minimis exemptions,” eBay said.
Earlier on Wednesday, President Donald Trump signed an executive order ending the loophole for low-value packages shipped from all countries, effective Aug. 29. The provision enabled shipments valued below $800 to enter the U.S. duty free.
EBay CEO Jamie Iannone said in an interview following the earnings report that the company is “well suited” to navigate any further uncertainty generated by Trump’s tariff policies or changes to de minimis.
“When we look at what happened, for example, when de minimis was eliminated in China, it did have a deceleration in direct shipments, but a lot of the sellers started making their products available to buyers in other countries like the U.K. and Germany,” Iannone said.
He added that the company “forward deployed” about 75% of its inventory from China into the U.S. before the changes to de minimis policies.
“We feel comfortable with the guidance that we put out there,” Iannone said.
EBay faces robust competition from online retail rivals Amazon, Walmart and Etsy, along with upstarts like low-cost e-commerce platforms Temu and Shein. To keep buyers and sellers returning to its site, the company has embraced “enthusiast” shoppers and “focus categories,” such as collectible sneakers and trading cards, used luxury goods and auto parts.
The company in May named Peggy Alford, a former PayPal executive, as its new CFO, succeeding Steve Priest. EBay also announced a broader leadership restructuring that involved bringing its technology teams closer together, Iannone said.
The company has also implemented more artificial intelligence tools to help consumers find products on its site, including a shopping agent, which launched earlier this year.
“We’re already seeing really tangible benefits from generative AI on our P&L, and we think we’re only scratching the surface in terms of how to leverage our data,” Iannone said.
As of Wednesday’s close, eBay shares were up 25% for the year, while the Nasdaq has gained about 9%.
WATCH: EBay breakout is here
Dylan Field, co-founder and CEO of Figma, appears at the Bloomberg Technology Summit in San Francisco on May 9, 2024.
David Paul Morris | Bloomberg | Getty Images
Figma, the developer of design software that was supposed to get acquired by Adobe, priced its IPO on Wednesday at $33 per share, above its expected range.
The company’s stock will debut on the New York Stock Exchange under the ticker symbol “FIG” on Thursday. The offering raised $1.2 billion, with most of the proceeds going to existing stockholders.
Figma is aiming to take advantage of a public market that has slowly reopened for tech IPOs. Stablecoin issuer Circle and artificial intelligence infrastructure provider CoreWeave have soared since their debuts earlier this year, while other companies including online banking firm Chime, and health-tech companies Hinge Health and Omada Health have also made it to market.
The offering values Figma at $19.3 billion. The company had agreed to be acquired by Adobe for $20 billion, but that deal fell apart in 2023 following objections from regulators. Adobe paid Figma a $1 billion termination fee.
On Monday, Figma said its expected price range was $30 to $32 per share.
Figma was founded in 2012 by CEO Dylan Field and Evan Wallace. The company is based in San Francisco, with offices in France, Germany, Japan, Singapore and the U.K.
Figma said in its updated prospectus that revenue for the quarter ended June rose to between $247 million and $250 million from $177.2 million a year earlier, representing growth of 40% at the middle of the range. As far as profits, the expected range for the quarter goes from an operating loss of up to $500,000 to an operating profit of $2.5 million, Figma said. That compared to a loss of $894.3 million a year earlier, due mostly to costs related to stock-based compensation.
For the March quarter, revenue rose 46% to $228.2 million, and net income tripled to $44.9 million.
Field is the company’s biggest investor, with 56.6 million shares ahead of the offering, along with voting control over another 26.7 million shares. Index Ventures is the leading institutional stakeholder, with 65.9 million shares, or 17 % of shares outstanding before the IPO. Greylock is second at 16%, followed by Kleiner Perkins at 14% and Sequoia Capital at 8.7%.
All of the top investors are selling a portion of their stake in the IPO.
Microsoft Chairman and CEO Satya Nadella speaks in front of the OpenAI logo at the Microsoft Build conference in Seattle, Washington, on May 19, 2025.
Jason Redmond | AFP | Getty Images
The $4 trillion club has a second member, at least based on after-hours trading.
Following a better-than-expected earnings report on Wednesday, Microsoft shares jumped 8%, lifting the software giant’s market cap to about $4.1 trillion. Should the rally stick on Thursday, Microsoft would join chipmaker Nvidia, which hit $4 trillion for the first time earlier this month.
Microsoft reported 18% revenue growth, its fastest rate of expansion in over three years, driven by its Azure cloud computing business. Microsoft disclosed Azure revenue in dollars for the first time, and said sales from Azure and other cloud services exceeded $75 billion in fiscal 2025, up 34% from the prior year.
As of the close on Wednesday, Microsoft shares were up 22% for the year, topping the S&P 500’s 8% gain. Microsoft hit a record close of $513.71 on July 25. The stock is above $553 in extended trading.
Nvidia and Microsoft, two of the biggest beneficiaries of the artificial intelligence boom, have zoomed past Apple on the market cap leaderboard. Apple is third at about $3.2 trillion, with its stock having fallen 17% this year as investors worry that the iPhone maker is getting left behind in AI. Apple reports quarterly results after the bell on Thursday.
Among tech’s megacaps, Nvidia has been the best performer in 2025, up 33%. The chipmaker’s graphics processing units (GPUs) are the backbone of the large language models being developed by Microsoft, OpenAI, Google, Meta and others, and they’re filling up data centers being built by those same companies.
Nvidia is scheduled to report results in late August.
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