While artificial intelligence (AI) is driving revenue and income growth at Meta Platforms, Inc. (NASDAQ: META) and Microsoft Corporation (NASDAQ: MSFT), investors are increasingly concerned about rising AI-related expenses and the companies’ ability to recoup these costs in the future.
The article provides key highlights of Meta and Microsoft’s quarterly earnings reports. It includes a technical analysis of META and MSFT, which serves as the basis for the Q1 2025 stock forecast for Meta Platforms and Microsoft Corporation.
Meta Platforms, Inc.’s Q4 2024 report
Meta Platforms, Inc. reported revenue of 48.4 billion USD in Q4 2024, exceeding analysts’ expectations of 47.0 billion. CEO Mark Zuckerberg highlighted the company’s achievements in AI, smart glasses, and the evolution of social networks, expressing confidence in further scaling these initiatives in 2025.
In December 2024, average daily active people (DAP) reached 3.35 billion users, marking a 5% year-on-year increase. The number of ad impressions across the Meta ecosystem grew by 6% in Q4 2024, while the average price per ad rose by 14%.
Meta invested 14.84 billion USD in capital expenditures in Q4 2024, bringing full-year spending to 39.23 billion. As of 31 December 2024, the company held 77.81 billion USD in cash, cash equivalents, and marketable securities. Free cash flow amounted to 13.15 billion USD for Q4 and 52.10 billion USD for the full year 2024.
By year-end, Meta’s total debt stood at 28.83 billion USD, while its headcount reached 74,067 employees, reflecting a 10% increase compared to 2023. For Q1 2025, Meta forecasts revenue in the range of 39.50 to 41.80 billion USD, representing year-on-year growth of 8-15%.
Overall, the report highlights Meta’s strong business momentum. However, the company’s future success will depend on its ability to manage rising costs efficiently while sustaining ad revenue growth and advancing new technology areas. If Meta delivers on market and investor expectations, its financial performance will likely remain robust, keeping its shares attractive to investors.
Meta Platforms, Inc.’s stock price forecast for Q1 2025
On the daily timeframe, Meta Platforms shares are trading within an ascending channel and have reached the upper boundary. Meanwhile, a divergence has formed on the MACD indicator. Together, these factors indicate a potential decline. Based on the current Meta Platforms stock performance, here are two possible price movement scenarios for Q1 2025.
The primary forecast for Meta Platforms stock suggests a corrective decline to the 540 USD support level. A rebound from this level would indicate the correction has ended, with the uptrend resuming towards the all-time high of 710 USD.
The alternative forecast for Meta Platforms stock anticipates a breakout above the channel’s upper boundary, potentially triggering a sharp rally that could drive the share price up to 875 USD.
Meta Platforms stock analysis and forecast for Q1 2025
Microsoft Corporation’s Q2 2025 report
On 29 January 2025, Microsoft Corporation reported its Q2 2025 results. Quarterly revenue reached 69.60 billion USD, reflecting a 12% year-on-year increase. Net income rose by 10% to 24.10 billion USD, while diluted EPS also grew by 10%, reaching 3.23 USD.
Microsoft Cloud revenue totalled 40.90 billion USD, reflecting a 21% increase. Revenue from Productivity and Business Processes grew by 14% to 29.40 billion USD, while Intelligent Cloud revenue rose by 19% to 25.50 billion USD. PC segment revenue reached 14.70 billion USD, remaining nearly unchanged compared to the same period in 2024.
Microsoft Azure revenue increased by 31%, falling short of forecasts. Meanwhile, AI and cloud investments pushed capital expenditures up to 22.60 billion USD, exceeding the forecasted 20.90 billion USD. Amid DeepSeek’s rapid success, concerns over weaker-than-expected Azure growth and rising capital expenditures unsettled investors, leading to a decline in Microsoft’s stock price following the quarterly earnings release.
During the last quarter, the company returned 9.70 billion USD to shareholders through dividends and stock buybacks. Nadella and Hood forecast Azure growth of 31%-32% in the next quarter, alongside continued high capital expenditures to support AI and cloud solutions.
In his comments to the report, Microsoft Chairman and CEO Satya Nadella highlighted the company’s innovations, particularly in AI. He noted that AI-driven revenue had surpassed an annualised rate of 13.00 billion USD, marking a 175% year-on-year increase. Nadella underscored AI’s crucial role in delivering return on investment for clients, emphasising the significant opportunities ahead. He also stressed Azure’s strategic importance and outlined Microsoft’s plans to expand its AI infrastructure, reaffirming its commitment to investing in technologies that transform work paradigms and customer interactions.
Microsoft Corporation’s stock price forecast for Q1 2025
On the daily timeframe, Microsoft Corporation stock has been trading within a sideways range since February 2024, with the lower boundary at 395 USD. The upper boundary fluctuates between 430 USD and 465 USD. The last three earnings reports triggered a decline in the share price, pushing it towards 400 USD. However, buyers entered the market near this level, increasing the price. With Microsoft’s planned 60.00 billion USD stock buyback in September 2024, company-driven demand for its own stock may provide additional support. Considering Microsoft Corporation’s stock performance, the following are potential price movement scenarios for Q1 2025.
The primary forecast for Microsoft Corporation stock projects a decline towards the 400 USD support level, followed by a rebound and a rise towards the all-time high of 465 USD.
The alternative forecast for Microsoft Corporation stock predicts a breakout below the 400 USD support level, leading to a decline to 365 USD before the share value resumes growth. A breakout below the 400 USD support could be triggered by news of another Chinese company’s breakthrough in the AI sector.
Microsoft Corporation stock analysis and forecast for Q1 2025
Summary
Meta and Microsoft are heavily investing in AI development. However, unlike Microsoft, Meta does not classify AI as a distinct segment or provide information about it. The return on Microsoft’s AI investment can be tracked through Azure, but growth in the could project fell short of expectations at the end of the quarter, raising concerns among investors and driving its stock price lower. In contrast, Meta reports growth in advertising revenues, attributing it to advancements in AI. As a result, Meta investors have fewer concerns. This explains the differing stock price movements of the two companies following their quarterly earnings reports. Furthermore, Meta has more growth drivers than Microsoft, as maintaining 30% quarterly growth in Azure is highly challenging.
Source: Roboforex
