Meta Surges 12%, Microsoft Tops $4T and the Fed Turn Hawkish

Welcome back to the Market Maker podcast. And just before we begin, literally before I hit the record button, Piers just asked me, what order do you want to do this episode in? We've got 3 things to talk about, 2 massive tech giants or a big macro update from the Fed. I was like, Piers, give the people what they want. They don't want to know about the Fed. They want to know about what's happened to my Meta shares. They're up 12% and why and how much further are you going to go? So look, back me. Drop me a comment. Who's right or wrong here? Do you want to hear in future, in a scenario like this, and I'm going to give you the headlines for context. Meta shares, so Facebook, i.e., Meta, have jumped 12% after smashing earnings. Microsoft have said its quarterly profits soared as revenues from its cloud computing division surged to a record level, pushing its market value past $1.234 trillion.

Whoa.

Or Jay Powell, the Fed chair, striking a hawkish tone as the Fed defies Trump's calls for a rate cut. And there's also US GDP. So I've pushed Piers here.

You know where my vote lies.

So Piers was like, we've gotta talk about Fed and interest rate situation. And I was like, no, no, no, no. So look, you as the community, let me know. So as your host, I'm willing to be proven wrong. And if in the future, in this scenario, you would like Fed first. And then the stocks, happy to do that. So let me know in the comments. So I'll put a poll, tech stock news or Fed, and you can just hit it and let me know. But yeah.

Well, let's do tech stock news. Fine. I mean, whatever. 12% up in one day. You know, one of the biggest tech firms on the planet. Is that news? I mean, yeah. You know, all right, fine. Yeah. Look, Meta, let's go. Meta have absolutely Destroyed it. It's such a, it's such an in, if you look back over the years, it's been such a journey for A, well, Zuckerberg obviously, B, everyone who works at Meta, but C, investors who own that stock. I mean, what a roller coaster. You know, some of the moves off their earnings, actually, I'd be interested to go back and maybe someone can do this or has this, but what's the kind of volatility off earnings releases for the big giant kind of, well, even just think the S&P 500, I reckon Meta's got to be up there, top of the list, most volatile reaction to earnings reports post-COVID. Because I remember one, I mean, I think it was back 2022 where the stock dumped 30% off their earnings report. And I remember Zuckerberg on the earnings call basically giving up and saying TikTok are basically destroying them.

You were reading his final rites at that point.

I was.

I thought this guy was down. He was, he was dead meat at that point.

And this is where, and this is where he was peddling his metaverse strategy, right? And launching billions, tens of billions of dollars at this thing that it was like, what the metaverse? What is this? Is that a thing? And it was just a disaster. A 30% drop in one day. Like here when I had 12% up. And obviously it's not just 12% up on the day. This is smashing new all-time highs.

Shares were sub-$100 at that metaverse peak.

Yeah.

They're now knocking $800.

Yep. And not even just the swing this year. If you go back, like 21st of April was the low of the year for Meta, $482. Really? Nearly $800.

In April.

Yep. April '21, $482. It's nearly, I mean, not quite, at least like 40% up. That's in, yeah, in a few months, right? So not only is this a huge move, obviously intraday 12%, but it's new all-time highs as well. So obviously extraordinary. Why is this all happening? Well, just straight up there, their numbers are just awesome. And I think what's kind of underpinning like this earnings season generally, the Mag Seven, I mean, they're back, right? And they might have had a little period, hang about on the sidelines, underperforming. Sorry, Mag Six. Fine. Let's take Tesla off that list. But they're the big tech giants. They're just absolute, they're back. With a vengeance. And look at their smashing revenue expectations. So for Q2, here's some numbers. Meta delivered $47.52 billion on the quarter, much better than the $44.8 expected. But more than that, that's a 22% revenue increase on the same quarter from last year. Where's all the money coming from? It's just straight up. And in many ways, it's a bit like Google when they were reported. It's just like their It's their core business. It's like advertising revenues are just stellar. And some of this is kind of AI related with some of their clever sort of products helping people to better target ads and so on. And it's leading to, or perhaps talk about the stats around usage figures, but people are spending more time on Instagram. They're spending more time on, I'm talking about users, individuals now, and there's more targeted advertising going on. And look, it's feeding through to just phenomenal numbers. Their net income was 18 $18.3 billion. The forecast was $15 billion and they've clocked $18.4 billion. I mean, these are just extraordinary beats and their revenue expectations for Q3, their range is $47.5 to $50 billion for Q3. That was well ahead of expectations. So no matter where you look on this report, it's just quite, it's just, you kind of just take a pause and go, Jesus. Fair play. So their core business is just absolutely destroying it. You then look at all the other stuff because they're obviously, Zuckerberg's very aggressively stepped up his, you know, the AI race. He's very aggressively this year stepped up and like he's offer, he's like trying to poach talent off OpenAI, Apple, Google. Some of the packages that he's putting on the table for, for individuals, we're talking $100 million $1 million bonuses are on the table for a single human being to come and work for me at Meta rather than my arch rival down the road at Google.

And like, I wonder who's making that market price. Well, is it the company offering that as an incentivization? Because it can't be because OpenAI and Apple and Google aren't paying that sort of salary. So surely there's a, it's like a bounty hunter and it's like, right, then my price, I don't care. I'm agnostic of tech firm. You pay me $100 million, you've got me in your superintelligence lab.

Yeah. I mean, this is it. What is the price? I mean, it was definitely not $100 million a few months back. Now all of a sudden it is. I mean, who knows? It'll be $200 million. By the end of the year, right? I mean, such is the size of the prize. I mean, I guess that this is the point, right? When you think about an individual getting $100 million bonus is just kind of insane. But then, you know, how much money do you throw at this from Meta's point of view or Google or Microsoft or all of them, right? And it's the size of the prize is so gigantic that actually, you know, in a few years' time, maybe you look back at this aggressive play and actually you see it as genius and actually really good value for getting an edge in the race, right? So talking about expenditures, so for this year, they've raised, so normally companies like this will say at the start of the year, they'll say, look, this is the range of money we're looking to spend, capital expenditures. All right. These days, the vast majority of that is on their kind of AI compute build out right there. So how many Nvidia chips are we going to buy basically? And so for Meta, they've increased the bottom side of the range, but they haven't increased the top side, which is interesting. So at the start of the year, they were saying, we're going to spend somewhere between $64 and $72 billion on CapEx. Now they're saying it's going to be somewhere between $66 and $72. So actually interesting here, all the other players are increasing their spend. They're increasing the top end of the range. So what's been a real Achilles heel for Meta. As I was saying, on that rollercoaster post-COVID, go back to that metaverse sort of Hail Mary play. One of the really big catalysts for the sharp downside was investors' opinions that Meta was throwing too much money at what was seen as a bit of a long shot, right? And like here, they've almost switched to the other side. Not that I'm saying $72 billion is a small amount of money, but at least they're not increasing spend. Whereas the other players are. But look, $72 billion is obviously still just gargantuan amounts of money. And so yeah, I guess they're in that sweet spot where the core business is just absolutely spewing out cash, making it obviously more affordable to be aggressive on the AI race. So I think that's the bottom line here. And the, just their numbers and the beats and the forecast for the rest of the year has just meant the stock That's just gone gangbusters.

Yeah. Alongside that talent blitz, the other thing I'd noted was that they've announced, not with this earnings release, but within the last month, several large data center projects, nuclear, new nuclear and renewable energy deals, building out their infrastructure to support AI drive. I mean, he, one thing I'm coming to really like about Zuckerberg is just his commitment to his decisiveness on a decision. I mean, the guy literally goes all in. I mean, and he definitely, I think the question was with the metaverse, could he pivot? I mean, obviously you were wrong and then can you pivot and go again? And like, yeah, I think that's very admirable the way he actually, given what happened with the metaverse, he's committed to this again fully.

Yeah. And so far it's interesting. I like, like when you put it like that, you then think, well, if you think about the Mag Seven, how many of them are still being led by their founder? And actually you'd say it's Jensen at NVIDIA and it's Zuckerberg at Meta, and then that's it. All right, fine. Musk at Tesla. But look, Tesla have dropped off, dropped out of the running here. But your Googles and your Apples and your Amazons and so on, and your Microsofts, they're not run by the founders anymore. And I think that is a different mentality. If you're still founder-led, I think Zuckerberg is still, it's like a dictatorship in a way, right? And he calls the shots and look, he's obviously made enough money personally His wealth is not within question. So what's the risk for him? Well, he wants to, what's his legacy, right? And he wants to build the legacy, which is Meta winning the AI race. And look, I'll double down, I'll triple down, I'll quadruple down, I'll throw all the money at it because the risk to me is, well, I'm rich beyond all dreams. It doesn't matter what happens to Meta from this point on. That's not going to change. So it's just about winning one of the big kind of secular shifts in the world.

Question for you, who's the bigger winner of the week, Mark Zuckerberg or Donald Trump? I was counting up the amount of money that not only are they going to be paying the US in tariffs, but also another, all these other countries are lumping in multi-hundred billion dollars. I was like, God, they must have committed like trillions now.

Yeah. Well, yeah, it is.

So I mean, so who's the man of the week? Trump or Zuckerberg?

I don't know. I mean, look, it's hard to, it's hard to, it's hard. Look, August, so pivots Trump are set because obviously August 1st, tomorrow, we're recording on Thursday, 31st of July here. That's D-Day as in, right, the Liberation Day, 2nd of April. Here we are in that kind of second phase where he said, right, just pull back from the brink here. Rather than me threatening all these D-Day tariffs, let's give you that kind of 90-day period. Let's talk it out, see if we can do some deals. Well, that's tomorrow is the deadline. That's why all of a sudden it's kind of all coming together, so to speak, in that he's obviously been at his golf course, or his golf course is, I should say, in Scotland. I love the fact he just rocks up at his golf course in Scotland and everyone comes to him and he turns Scottish golf course into some some kind of global trade agreement conference and everyone wheels up. Anyway, EU deal in the bag, 15% tariffs on everything basically. But then the EU will spend, I can't remember the numbers now. What was it? 600 billion on energy, I think US energy and then I can't remember something else. Anyway, just huge amounts of money as you're saying.

Yeah.

Look, Trump Look, I'd say this is turning into a definitely a successful week for Trump on the tariffs. So everyone's falling into line and there's a few outliers that are kind of digging their heels in, like India, for example. And so now Trump's saying, all right, well look, if you're not going to do a deal, it's going to be 25% tariffs. And you know, will India fall into line? Probably. There's an issue around India buying Russian oil and Trump doesn't like that. So that's a kind of sticking point in that deal because where does India go for their oil? Because obviously a huge portion of their oil comes from Russia. So obviously Trump wants to pivot that money to the US and they should buy US energy, but I don't know if there's enough capacity. But look, so yeah, generally speaking from a tariff point of view, it has been a very, very positive week, you would say. And I'd probably put him ahead of Trump. Oh, sorry, of, of, of Met Zuckerberg for, yeah, most successful week, although we've still got a full 24 hours to go yet. So, yeah.

And in Trump world, that's a long time. And look, I won't want anyone to hear or to listen to think that, you know, we are, we are being fanboys of Trump here. We're just calling it as we see it. And these deals are indeed coming over the line. So, and I just was reading Canada, perhaps not though, given some of the latest comments that Mark Carney's been making. So we'll see how that plays out.

Yes, indeed.

Given the somewhat lack of leverage Carney has.

Well, that's it. But the final point, Trump is trying to weave in some political sort of elements to these deals. So I think it was Cambodia and someone else where part of the deal was, look, you've got to have some kind of ceasefire agreement, which actually is not entirely in Cambodia's control, right? So obviously they could try and do that. And, but so anyway, my point is it's, these deals are not straightforward. Nor, I mean, like pre-Trump, normally a trade agreement would take literally years to negotiate. And you know, here's Trump saying, let's do 200 trade agreements in 90 days. You know, clearly that is impossible. And so here we are at the end of the 90 days, but the key thing is the big the big players, as in the countries that have the largest trade surpluses/deficits with the US, they're coming into line and deals are getting done. And so from a kind of global risk point of view, from a global tariff risk point of view, as long as those big deals come in, which they are doing, then look, markets were right to kind of look beyond it and not see it as a risk like some were.

Okay, I'm going to meet you halfway and let's, as we've mentioned Trump, let's move into the Fed situation. We'll circle back to Microsoft. So yeah, I got my way. So the market, we had equities initially just in the wake of the immediacy of the announcement from the Fed on Wednesday midweek, the dollar rallied, stocks did fall slightly. So the asset class reaction would've been somewhat of a hawkish one. So what was going on here to create that movement?

So the outcome of this meeting was that it was hawkish. So that means very simply, if you want to put it in real simple terms, let's put it in interest rate terms. We now think interest rates are going to be higher than we did before in the future. Meaning the Fed are going to cut, there'll be less cuts than we were hoping is maybe the best way to put it. Okay. Now there's a few layers to this. Obviously there's the Trump-Powell sort of battle that's been going on and played out in the media. And the latest one, did you see Trump so awkward during, he visited the Federal Reserve who are undergoing, I didn't actually know this, they're redeveloping their building. And it spiraled to like over $3 billion worth of costs. So Trump was like, perfect, I can get in there. I saw live TV and I can make everyone aware of how Powell's let this got way out of control.

Yeah, I saw this video of that and it was like they had hard hats on, they're walking through this derelict old, you know, the Federal Reserve building. And then Trump got out this piece of paperwork just in front of the media and he was like, Yeah, $3 billion. And Powell was like, what? Like, where did that number come from? And then he was like, can I have the paper? And then Powell, like this kind of lawyer that he is from trained profession, puts his glasses on, looks at the paperwork and goes, now that's the building you built 5 years ago. And I was like, I said to my wife, I was like, is this real?

Yeah. It can't be real. It's extraordinary.

Like surely that's, this is fake news. Like, 'cause, and it, and so it was like Laurel and Hardy. It was like this kind of fictitious role play. And I was like, wow, imagine if I showed myself 6 months ago the image of those two in hard hats, like doing what they're doing. I'd be like, you're crazy. But here we are.

But basically Powell, I would imagine, came away from that like furious that Trump made him, or at least tried to make him out to look like some kind of idiot. And I would've been fuming if I was Powell. So look, Obviously they've been at loggerheads. Trump wants Powell to cut rates. Powell's like, get outta my face. You know, you're not, you know, you can't influence us, the Federal Reserve. We're independent, okay? For good reasons. And we control monetary policy. Say whatever you want. But actually it's got to the point now where I would say even if it's just subconsciously, Powell's now doing the opposite. Because he doesn't want to be seen to kind of be sort of giving in, if you like, and cutting. So I'm not surprised this meeting turned out to be slightly hawkish just for that relationship and political situation between the two of them, whether it's subconscious or conscious, I don't know. But look, ultimately what Powell did at this meeting, they didn't cut rates and we weren't expecting them to, but it was about, right, September cut. For months and months and months, everyone's been predicting the first cut in 2025 will be at the September meeting. And actually really what Powell did at this meeting was not only did they not cut yesterday, but also they reduced the chances of a September cut. It's about 50/50 now, which is quite interesting. We could talk about, we've had a lot of data this week. We've had GDP data, we've had inflation data. Tomorrow on Friday, we're going to get labor market data on top of all the earnings reports and the Fed meeting. It's been a mega week for macro and micro news flow, right? But on the GDP side, no, this obviously is a complex bit of data this, but, and it's been so disrupted by the tariff thing 'cause we had companies in Q1 frontloading their purchases and building up inventory 'cause they were worried tariffs were coming in Q2. That just meant then there was a drop-off in kind of inventory buildup in Q2, and that's really screwed up the headline GDP figures. So actually the GDP number in itself is a bit useless. So it was 3%, just to be accurate, but it was -0.5% in Q1. Really, you got to take both together and kind of just take the average, I would say. But when you look under the bonnet of it, well then actually you start to look at what's the most worrying is something called final domestic sales. So this is looking at real final sales to private domestic purchases. Okay? It kind of just takes out all that import-export, stuff which screws up the headline data. And what you're seeing is actually a real loss of momentum. So we've really stepped quite sharply down from 2024. On average in 2024, we had about a 2.5% to 2.75% growth rate in real final sales to private domestic purchases. Okay? But so around about 2.5% to 2.75% in this year, it's dropped in Q1 to 2% and now in Q2, 2% to nearly 1%. So it's really stepping down, which perhaps indicates that consumption is losing momentum. And about 75% of GDP is consumption. So if that thing's going in the wrong direction, and obviously if it continues on that trend, then we might have a bit of a problem. But look, none of that is showing up in the labor market though. And this is the confusing thing. The labor market's super strong. When you look at things like the unemployment rate, It's 4.1%. It's like multi-decade lows, right? But the thing is the labor force is actually shrinking. And again, linked back to Trump policy about immigration and so on. So you basically got a shrinking workforce, fewer jobs being created, but one's offsetting the other and it's fine. You're still ending up with this kind of full employment idea. So Powell's like, I'm not cutting. Look, labor market's really strong. And then you look at inflation and it's again a little tricky. We just had PCE inflation figures out earlier this afternoon. It actually went back up, which was okay, fine, justifies Powell's more hawkishness. So year on year is at 2.6%. So look, like forever economic data, you can spin it however you want and there's reasons in there to back a cut and there's reasons to say actually we should hold off. What What was really interesting about the Fed meeting was that there were two members of the Fed, so Michelle Bowman and Christopher Waller, who both dissented.

He's going for a job, Chris.

Well, Chris Waller's one of the shortlisted candidates. 100%. He's going for the job. He's a shortlisted candidate to replace Powell when his term ends next year. But Waller and Bowman said we should cut now, this meeting in August. Oh, sorry, in July. The what's weird, I still can't believe this stat, but apparently that's the first time there's been two people that have dissented on the Federal Open Market Committee. Two people that have dissented, i.e., wanting to do something different to what the committee overall has decided to do. It's the first time there's been two dissenters for over 30 years apparently, which I don't know, I can't believe. Again, just further emphasizes the division even within the Fed now, which you could say has been sort of Trump's strategy all along. Whilst I can't remove Powell, let's do everything in our power to try and get the world and markets thinking that more cuts are coming. 'Cause ultimately Trump just wants lower yields so he can refinance American debt at lower cost. Right? So yeah, Quite an interesting mix, but overall hawkish and big move was the dollar. You know, if you take all the asset classes muted and mainly, and obviously these big earnings results have kind of been in the mix when you're thinking about equities, but check out the dollar move this week. Really quite aggressive dollar strength off the back of what's been a very weak year for the dollar. So it's been weak all year, so it's now rebounded. All right, a small portion, but look, the dollar's lost 10% of its value in the first half of this year. So it's got a huge distance down and we've had a quite a decent step back up here as people begin to worry that September cut ain't going to happen.

Right. And then the clues coming for that is looking ahead, what are the known things that are coming? And obviously there's the uncertainty over Trump, but there is a degree of clarity now just given the deals that are ongoing being negotiated. So the surprise factor is probably lesser than it was more several months ago. But then Powell, he's speaking at the Kansas City Fed's Jackson Hole event that happens in late August. So not far, 3 weeks or so from now. And that event is akin to the FOMC's 9th meeting of the year situation.

Yeah.

So the Fed, just for clarity, have 8 meetings a year, but Jackson Hole historically has been a platform to signal, also to communicate as a Federal Reserve Chairman, potential changes in policy. So not that we're expecting that right now, but it's a platform nonetheless. And then you've got, you mentioned the jobs data from when we're recording this, actually tomorrow, but then you also get the following report, Plus readings for inflation in July. So this is all coming down the pipe, which are very weighted factors for this will they, won't they situation.

And there's another point to make actually, because one of the things that Powell has been using as a reason why they're not cutting is the uncertainty on how tariffs might impact inflation, as in push inflation back up. So we can't cut because of that potential risk. Now, as it stands, Tariffs, well, hey, we haven't had the nightmare high tariffs that Trump was originally threatening, but tariffs are going up 15%, deals getting done with the EU and Japan and whatever, right? So how much of that increase is going to be fed through to the consumer? And what we found is there's been a surprising amount of companies wearing some of this tariff increase themselves, i.e., their margins are narrowing. But it was interesting in this earnings season to hear from individual companies about how these tariffs are having an impact and then what they're talking about with regards to pricing strategy going forwards. And will inflation go up because of tariffs or not? So I've got 3 examples here from the earnings season so far. So Procter Gamble. So look, forget tech here. You know, all these software companies, they're not really impacted by tariffs. So this is like physical goods, all right? So Procter Gamble said in their earnings report that they're forecasting, sorry, they're forecasting a $1 billion hit to pre-tax profits in the full year because of tariffs. And what they said on the call was, so they're saying, look, we will look for every opportunity to mitigate these impacts, including sourcing flexibility, productivity improvements, blah, blah, blah. But they said pricing with innovation, in affected categories, which is a kind of very convoluted way of saying, look, we're probably going to have to increase prices.

Sorry.

General Motors CFO, basically they're saying that we're still tracking to offset at least 30% of the $4 to $5 billion full-year tariff impact. So they're looking to offset 30% through things like, and they've described it as targeted cost initiatives and consistent pricing. Translate, we're putting prices up. Stanley Black Decker, they're talking about an $800 million tariff impact and they're talking about targeted pricing actions. Again, translate to we're going to have to put prices up. So when you think about that, again, that's evidence in Powell's camp and justification to look, let's just wait here. And let's just see how this plays out. What's a few more months, you know, in the grand scheme of things, if it means we're patient and not making an error by cutting and then inflation gets out of control again.

And I guess the market pricing dictates that degree of uncertainty right now. You said it's 50/50 basically. Yeah. So 50/50 is not where the central bank wants it to be at the point of release. Because by being not priced in, it's going to create and destabilize short-term, at least it's going to create market volatility. And that is the central bank effectively failing on its ability to forward guide appropriately. So even though the, you know, Powell's juggling a pretty tricky proposition here of factors, you would imagine though that that 50 is probably going to shift one way or the other. Those incoming data points, developments with Trump, plus The whatever else could happen in the interim period. Yeah. We'll shift the night, shift the needle.

Well, look, you go back a few weeks and a September cut was almost 100%, right? Likely. And now it's 50%. So that's why the dollar's strengthened. And yeah, and a direction of travel. If Trump carries on pissing off Powell at every opportunity, well then like, you know, the chances are going to drop below 50%. Of a cut in September.

Come on, Powell's not— he's bigger than that.

Well, he's human. Like, once he's been cut, that's the chink of his armor then. That's embarrassed on live TV.

So Powell's got a bigger ego than Trump then. Maybe not. All right, well, let's, uh, let's close and talk about, uh, Microsoft, because again, another mega-cap giant with its market value. I mean, God, $4 trillion. It's amazing. So it's kind of like predicting the future. Will we get a $10 trillion company one day? Yeah, for sure we will. We're at the $4 trillion market now. So yeah, Microsoft.

Well, they're the second company to hit the $4 trillion mark ever in history. That is so, Nvidia passed that level on July 9th. Actually talking about getting to $10 So since Nvidia hit $4 trillion on the 9th of July, like here we are, what, 3 weeks later, they've already added another $400 billion to the, they're now $4.4 trillion, which is just mind-blowing. Anyway, that's Nvidia. So look, Microsoft, well, so in early trading they've cut, it's come back off a little bit, I would say, but like overnight The initial kind of reactions in aftermarket trade was that their stock was up about 6.5%. Just looking now, it's come back a couple of percent, so it's up 4.5% at the moment. But like Meta, these are huge gains through all-time ever highs, right? So it's not like these companies were cheap having had a big sell-off and relief rally. These are big strides up through all-time ever highs. So yeah, Microsoft took out the $500 handle at the end of June and now it's $535 and it's just kind of motoring. But you know what, for them it was all about Azure and one of, so that's their cloud service division. And actually for the first time ever, and due to investor pressure, by the way, um, Della, the CEO, was talking about, right, we're gonna split things out and we're gonna let you know for the first time ever, how much revenue our cloud division has made as a single unit and what's the growth rate of that unit. And so this was the big news. And so the, so they've said that for their fiscal year, so a full, the last full 12 months to the end of June, their Azure cloud division brought in $75 billion in revenue and its growth rate is 34%. So that's the big news, right? And it's just kind of stratospheric that something that's already that gargantuan in size can be growing a 34% growth rate, right? And so I think what's interesting with Microsoft talking about AI, they're kind of very well placed for kind of the second and third phases. So phase one of AI is like, it's like NVIDIA, right? That's the kind of, the kind of infrastructure that you need. And so, well, actually, well, so Microsoft are in that, I would say they're in the infrastructure layer, right? So you've got NVIDIA who built the chips, but then you need the cloud compute to be able to run these kind of things. And so this is where Microsoft are very well placed. It's only them and AWS. They're the two big cloud service providers. Google are trying to catch up, but the big two are definitely AWS and Azure at Microsoft. So they're, going great guns. Okay. But then the next is the kind of application layer. So that's right, fine. We've got all this compute power, but right, what are the apps that then I can use to kind of make my life more efficient? And so obviously Copilot and stuff, obviously they're a big investor in OpenAI. So here they're making money now through that. And then finally you'll see the third phase of AI, which is efficiency gains. At all companies across the world, right? And human life in general. So as an investor, it was about trying to invest in the infrastructure guys first, NVIDIA, Microsoft, and so on. Then it's right, who's got the apps? OpenAI, Copilot, all the rest of it. And then right, let's just actually think about more broadly which companies are going to have the most rapid efficiency gains because of all this stuff that kind of comes next. But yeah, Microsoft are right in amongst it. Their revenues net overall, whilst their cloud division was up 34% net as a whole business, they were up 18%. And look, their cloud costs $75 billion for a year, right? That's roughly their quarterly revenue overall. So overall, their quarterly revenue to the end of June was $76.4 billion. So yeah, you could say from that rough maths, a quarter of their revenue is now from Azure and it's the fastest growing part of their company. So that was the kind of, big news.

And yeah, I was just looking at basically like a summation on The Street of what the equity analysts on the sell side banks were saying. Kind of, you pretty much covered it. Like, they're, most of them are long still. So in terms of their positioning, remain saying that they, they're kind of set to capture major secular trends, GenAI, public cloud consumption, SaaS adoption, And there's something interesting you said earlier as well, that tech, and in this case Microsoft, insulated somewhat from tariff considerations.

Yeah.

So of the moment, it's almost like compounding these moves, right? For these big tech firms, given what's happening to your Procter Gamble and your Black Decker.

Yeah. And it's just that the one negative for all of this has been that idea earlier this year that American exceptionalism was over. That was the trade of 2023, 2024.

That's, I think we said that.

That ship sailed. Yeah. That ship's well sailed. And the players, you had that little window of opportunity to pick up these big tech boys. You know, they stepped down like 20%, 30% in some cases. That was your little window. It's just hard now. And then when you look at the Microsoft share price, You can't buy now. It's like famous, famous words. So the upside is, well, but this is the thing about human nature, right? If you are in the trade, and look, I'll own up, I own Microsoft shares. Okay. I'm really happy.

You're the 8th biggest shareholder though, right?

Well, but my point is I'm holding, I'm not selling, even though it's just kind of through the roof. I am holding. Okay. But if I didn't own those shares, Would I now buy? Because you should do if the rationale is it's going to go higher, but it's very difficult to buy something that has just gone through a vertical kind of smash up through all-time highs. You feel like you are buying something that's at the top and it's really expensive.

But a good case study of that from human behavior in recent months might be Nvidia. What did they get to? $135 or something? And then you had the big move down to 90, and now it's trading at what, 200?

Well, yeah, exactly.

So if you bought at 130, yeah, you might have felt like this is the worst call ever. But that, that's that being vested concept of time and duration, right? With your horizon. Because yeah, I think I can't recall the stat now, but it was one of those data studies that they had done. And it was looking at if you bought at the top at the time of all of these stocks, then actually you'll end up making more money than trying to pick bottoms.

Yeah.

Because your famous phrase.

Yeah, exactly. Get smelly fingers.

And on that note, yeah, cool. All right, well look, let's wrap it up there. Yeah. Incredibly busy week. Lots going on. So, so stay—

Google and Apple tonight in terms of more like the earnings season is far from over here. You got two of the biggest giants of all, not Google, sorry. Apple and Amazon, I think. Am I right saying?

Yes.

Correct. Still some big guns still to deliver and a payrolls report tomorrow.

Cool. Alright, well look, if you've made it to the end of the episode, then You're a big fan because I see the stats on dropout rates. If you have, then you're probably a regular listener. So can I ask just one quick favor? I'm going to drop a link within the comments or the text of this episode, and we have been shortlisted for the People's Choice Awards at the British Podcast Awards for 2025. It takes no more than like 10 seconds to vote. But can I ask you take that 10 seconds, click on the link, you just need to search Market Maker, select it and hit fire. And that's it. That would be amazing.

Yes, please.

All right. Thank you everyone. Thank you, Piers. See you next week.

Yep. Catch you later.

Bye now.