Microsoft and Alphabet earnings
Lale Akoner, global market strategist for etoro, says: “The market is starting to distinguish between AI spending that expands a business and spending needed to defend one.
“Microsoft’s Azure growth accelerated to 48%, while capital spending came in below expectations. Microsoft 365 also delivered revenue growth well above user growth, suggesting scope to earn more from existing customers.
“Alphabet faces a harder equation. Search missed forecasts, AI Mode monetises less effectively, and free cash flow was negative. Its cloud beat demonstrates demand, but does not settle whether AI strengthens the economics of the wider business.
“Lower spending alone does not make a stronger investment case. Microsoft’s spending shortfall may reflect delivery timing, while Alphabet’s investment losses distort headline earnings.
“For investors, the sharper question is whether each additional dollar of AI investment increases future cash generation or raises the cost of staying competitive. These results suggest the hyperscalers increasingly deserve different valuations, rather than being treated as one AI trade.”
Aston Martin finds its Valhalla of hope
Adam Vettese, market analyst for etoro, says: “Aston Martin shares jumped at the open as the market took the latest update as further proof that the long-promised reset is starting to stick. The real story is not the modest revenue beat or the still negative bottom line, but the clear evidence that richer product mix is finally moving the dial on margins and cash. Valhalla deliveries are doing the heavy lifting, allowing the company to generate meaningfully better economics without needing the unrealistic volume surge that previous management chased.
“That is the right direction for a brand that has burned through billions of equity capital. Management is showing it can run the business profitably closer to the volumes it can actually sell, rather than the volumes it once dreamed of. Holding full-year guidance intact, after years of disappointment, also helps restore a little credibility.
“None of this makes the equity a straightforward recovery play. The debt pile remains large, interest costs are heavy, and any stumble in the remaining specials ramp or a further softening in core demand could quickly reopen funding questions. The share price reaction shows investors are willing to give the turnaround the benefit of the doubt for now, but there is still a long way to go. Whether that optimism lasts will depend on whether the better cash trends survive the fourth quarter and into next year.”
Commenting on Alphabet’s shares tumbling in $500bn rout, Neil Wilson, UK Investor Strategist at Saxo, said: “A drop this size blows a big hole in all the major indices, it’s not a pretty picture. It shows that investors don’t just want capex, they want to see the returns already. The cannabalisation of the core search business is the big concern specific to Alphabet rather than the wider AI story but it’s all kind of connected. Google needs AI answers to continually improve to keep people coming back but it earns less on those queries than on traditional search. It has to shore up its core search business while also being at the forefront of disrupting the entire model.”
“For the wider AI trade, we are starting to see a more critical evaluation of the return on investment from this monster AI splurge. If anything, the fact that core search is under pressure from AI is not a sign that the AI ecosystem is struggling. In fact, it could be seen as a major positive for a continued bull thesis. Google Cloud earnings doubled and it’s about the mix (Gemini vs classic search) and whether you see more of a positive impact on earnings per share from Cloud/AI in the long-term than you see the negative impact from lost core search. I’d be looking at this pullback as an opportunity.”
BP’s oil windfall exposes the cost of its green ambitions
Mark Crouch, market analyst for etoro, says: “BP is making the most of an energy market turned upside down by geopolitical turmoil, with soaring refining margins and stronger trading delivering a remarkable surge in profits. But the real achievement is what the oil giant is doing with that windfall. An extraordinary $8.4 billion reduction in net debt in just three months gives management considerably more financial freedom, helping explain why the shares have climbed to their highest levels in 16 years.
“There is an uncomfortable irony in BP’s results, as traditional oil and gas operations are generating enormous cash flows while billions are being written off investments tied largely to the energy transition. BP’s ambitions may have been admirable, but shareholders are entitled to question whether commercial discipline took a back seat.
“With rivals enjoying record valuations, the cost of those decisions is becoming harder to ignore. Higher energy prices have undoubtedly helped BP’s recovery, but the renewed focus on financial discipline offers something more lasting. December’s strategy update should reveal just how decisively management intends to build on that progress.”
AstraZeneca shows it still has the right prescription for growth
Adam Vettese, market analyst for etoro, says: “AstraZeneca shares rose at the open as the market digested a set of results that showed the company can still grow even as one of its biggest products fades. Farxiga is now facing generic competition in the US, yet total revenue still advanced 7 per cent at constant exchange rates and core earnings rose in the mid-teens. The growth came from the parts of the business that matter most for the next decade; oncology, rare disease and respiratory medicines. Tagrisso, Imfinzi and Enhertu continued to expand, while Tezspire and Ultomiris kept gaining ground, that is the real story.
“Management reconfirmed full-year guidance and pointed to a pipeline that has already delivered 12 positive late stage readouts this year, with more big data expected in 2027. The company is still tracking toward its $80 billion revenue ambition by 2030. Investors are not ignoring the Farxiga hit or the pricing pressures in China, but they appear willing to look through them for now. The reaction suggests the market still sees AstraZeneca as one of the few large pharmaceutical groups with enough new products in the wings to keep growing once the current patent losses are fully absorbed.”
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