He Told You to Buy the Dip. Now It's Up 20%.

He said to buy the dip for months. >> People are going to look back and say [music] that was a name that was a no-brainer to buy. >> That payoff is finally here in a big way for investors. Joining [music] us today is Market Beats Chris March to break down that really strong earnings report for Microsoft and the big boost we're seeing in the market afterwards. He's also going to dive into the earnings reports of all five of the Mag 7 companies that are reported in the last week. From Microsoft to Meta, Alphabet, Amazon, and Apple. We will break them all down and how the market's reacting and what investors can do to navigate those moves over the next few days and weeks ahead. Chris, let's go ahead and get started with the good news report today and that is Microsoft. We are recording this around lunchtime on Thursday when the market is up about 15% on Microsoft. A lot of very positive reaction to that earnings report. Let's dive into why. >> You know, for once, good news was actually good news and and the markets interpreting it that way. Microsoft checked literally all the boxes that they needed to check. Azure growth came in at 43%. That was above the 40% growth that they reported last quarter and above the 41% that the analysts were expecting. And to be honest, some of the whisper numbers for that Azure growth were even higher than 41, but not 43. So, it was even beating that forecast. Then you had the company reporting their capex. No surprise, $41 billion in the quarter. That was up significantly obviously from the prior year, but it was in line with what their prior guidance was. They guided to $175 billion in capex spend for the fiscal year of 2027. Keep in mind, their fiscal year just started in July. So they're saying between July 1st of this year, June 30th of next year, 170 billion75 billion that is making investors feel good. For the third point, Microsoft is showing that they're being able to monetize AI and so now it just feels like it was the right report. >> Yeah, monetizing AI is a huge part of this Microsoft growth story. And I think uh you've mentioned this before when you were talking about buy the dip in Microsoft talking about how their AI story was actually growing more than people anticipated and that showed up in their earnings report too. Let's dive into that area a little bit more because I think so many investors so many people on Wall Street discounted that part of Microsoft's growth story. >> Yeah. Well, I mean obviously there's the Azure story first which is an AI story. It is a cloud story too but it's also leads into the AI. They reported 30, I think it was 30 million users for C-Pilot, 30 million seats for Copilot. That was up from 20 million in the last quarter. So, I don't know if if Microsoft was being conservative in the past, or if it was literally they just didn't have any way of accounting for it, but they're showing incredible growth on that, which is supporting that thesis, that Applelike thesis for Microsoft of it has just such an established user base. those users are going to have co-pilot in their systems and then the question just is are they using it or not? But I think the reality is Microsoft's getting paid whether the users actually use it or not on the seats that's contributing to what investors are seeing. They're seeing you're spending on this capex for this demand that you say is there and you're showing us the ability to monetize it at a and your your capex spend is a lower percentage than how fast you're growing Azure which is a key distinction for investors. >> Yeah, capex is going to be a theme of what we talk about in all of the different earnings reports we're going to dive into today. Of course, this week huge for the Mag 7 names. We're recording this before the last two report later on today after market close. So, we're going to give a preview of that as well, but we're going to dive into all of those. And again, Capex is probably the main theme that we're going to hear about. I want to dive a little bit more into uh what you mentioned on Microsoft being uh a brand that people are just used to using and how being that legacy company helps them with the user numbers uh in this new area. I think this is something that's important for not just Microsoft but the whole AI growth story and that's where do people choose to use AI in their day-to-day lives and if you're already using Microsoft as a part of your workflow will you choose to use co-pilot over going to a separate chat GPT or claude window. Um I think that that's an interesting point. I think it could have implications even for Alphabet or for Google if people are just choosing to use AI where they're used to using it. Do you think that that could be a a growth story for Microsoft or impact other businesses as well? >> Well, I I think it could impact other businesses, but I mean, because you think about it, if we're in this whole tokenization, token maxing debate is going on. If you're an enterprise customer and you're paying Microsoft to give to put co-pilot seats for all of, you know, for your employees, you're going to want your employees using co-pilot. you're not going to want your co your employees then turning around and using anthropic or open AAI. You're you're going to want them using C-pilot because that's what you're already paying them to use. So, I think that's part of the story here. I don't think it's so much the individual user, which that may be more of an Apple story, but I think you're you're looking at the enterprise customers saying, "We're already paying our employees to use C-Pilot. We want them to use Copilot." >> Yeah, I think that's a huge part of the story and could continue to be a part of Microsoft's story down the road. So, a really strong quarter for Microsoft. Let's talk about their capex before we get into some different reactions to capex in the market. And that's going to be the next company we talk about. But there was capex spending here for Microsoft. Why is the market still positive when it's reacted negatively to other capex reports? >> Well, I think it's because Microsoft didn't surprise anybody. They they came in at $41 billion. That was about right in line with what they said they were going to do. So, it's easy for analysts to look past the fact that yes, it's higher year-over-year. Yes, it's higher than it was in the prior quarter, but Microsoft already told you that was going to be. And they didn't sit there and say, "Okay, well, it's even higher than we thought it was going to be." And then the better piece of the story is they guided to a number of 175 billion for the fiscal year of 2027. And that goes along with the 190 billion that they forecasted for the calendar year of 2026. So the number looks like it's staying steady. It's staying in line with spending numbers and it doesn't look like that spending is increasing. And one other thing, Bridget, Microsoft was cash flow free cash flow positive this quarter. It was down 23% year-over-year, but they were still free cash flow positive. And they said they're going to be free cash flow positive for all of fiscal year 2027, which is taking away another key concern that the investors have about is the capex spending going to eat away at that free cash flow. >> Yeah, I think that's a huge piece of of market confidence is do they have free cash flow to to support all of these huge spending that they're doing right now on AI. I know that's a key piece of this critical warning on some major name AI stocks that every investor should get out of their portfolio right now before a critical announcement coming up in just a couple of days, July 31st. You can get the details on those three stocks to get out of your portfolio now and three others to add in that are actually strong buys in the AI story. That's coming from Wall Street veteran Mark Jacen. Again, this is a free investment strategy from Mark Jacen on three stocks to get out of right now before that July 31st deadline and three stocks he says investors should add instead. You can check out that free strategy here by scanning the QR code or going to the link in the description to learn more about those three AI stocks he says investors should get out of now ahead of that July 31st deadline. So, time is running out. Go to that report as soon as you can. Now, Chris, let's get back to Microsoft right now and the strong positive response we're seeing in the market. Do you think this could be a short-lived bounce on a good earnings report, or do you think that this could be the start of a longer term growth story and recovery story for Microsoft? >> I'm cautiously optimistic that this is just the beginning of something. I believe you're going to start seeing analysts come in and raising their targets. The consensus target is $556 as we're taping this right now. That's 23% upside. I suspect those price targets are going to go much higher, especially when you consider that Microsoft was trading at a tremendous discount, trading at a discount to its history. And it was trading at a near par with the S&P 500 because it's at it's at 26.7 times earnings right now. And that's, you know, that that was the last I checked the S&P 500, that's pretty much right in line with it. Which means that if Microsoft's trading in line with the S&P 500, it's trading at an enormous discount to what tech stocks normally get priced at. >> Yeah, very true. People should be looking at Microsoft as a tech stock because it definitely falls into that category. I want to know from people watching, did you buy the dip when Chris recommended buying the dip in Microsoft? And are you enjoying the nice little boost today? Uh let me know if you've added to your Microsoft position anytime in the last month or two while the stock has been down. I'd love to hear that in the comments. It's nice to hear win stories from our viewers. Let's move on to that next company that's having a very different reaction in the market and that's Meta. What are we seeing there? >> It was an interesting report. Meta's down about 9% today. They had a slight beat on revenue but they missed on adjusted earnings per share. Then the second part of the story is the company was guiding to higher capex spending than they had previously projected. And that's part of this story. The revenue guidance for next quarter came in a little light. They they're projecting a range of 61 to 64 billion. The low end of that range is below where analysts are looking for around 63.15 billion. So analysts were a little bit wary of that number. Their their fullear capex they guided between 135 and 145 billion. That's up at the low end. Last in the last quarter they said it was going to be between 125 and 145 billion. Although that's not something that should be entirely alarming. I think what is concerning people is they've seen this story before with Meta. Apparently on the call last night, the company was rather non-committal as far as where do they see and what is their plan for monetization of this? They're kind of taking the approach of well, we have to build it first and then we'll figure it out. And I think to some investors that smacks of yeah, let's go take some cash to build out the metaverse. And that wound up just being a company that was burning billions of dollars in cash. And I think they're they're getting wary that they're hearing that same story again because remember AI isn't the same driver for Meta as it would be for a company like Microsoft. Meta is still generating the significant amount of their revenue from ad revenue from their, you know, obviously and an and unquestioned leadership in the social media space. >> Yeah, that's very true that there there needs to be a use case for AI in Meta's story and I don't think we're seeing that yet. And and that is a legitimate concern for investors of where does that EIP turn into real revenue for Meta and it is all those concerns really seem to be showing up in the stock chart. Looking at Meta's stock chart, not just this year, but pulling back and looking at the last 18 months to two years, it feels like volatility has just been the name of the game here. The stock has been struggling to find a true price and where does the value lie in Meta right now. What's your take on what's happening in the price action for Meta? It looks like it's down almost 25% in the last year. What does that mean to you? >> Well, you know, I it's it's funny because if if we go by just again that that PE ratio that many investors like to look at when they when we're talking about valuation, Meta has an even more attractive PE ratio than Microsoft. Their PE ratio is down around 19 times right now. I think a lot of investors are waiting for Meta to prove the story and they're not proving it. And then you've got the regulatory issues on the social media side of it. It just was a sloppy print for them yesterday. And I think that's really what's being flushed out of the stock right now. >> Yeah. I'm I'm curious if we see a turnaround or what it will really take. Is it is it that firm evidence of we have found a path to profitability for all of this AI expenditure that we're doing? Uh what is that turnaround story for Meta? Because there's it's undeniable the company is very profitable. Of course, it's an ad revenue machine, but what will it take to turn consumer confidence around in the market to actually reinvigorate trade behind the stock? >> They're going to have to give investors more than what they got yesterday on the call as far as a plan for how they're going to monetize this uh to ensure that there is demand really there because that seemed to be a point of some uh skepticism with analysts. It was kind of like, well, are you building this because you're going to have excess capacity, which means you're you're overbuilding, or are you building the extra capacity because you know there's going to be demand for it? Those are two very different statements. And it seems like that question was not really answered. And so, and then again, you've got the social media issue and the company did say that that was a part of why they had the earnings miss was the fact that they have, you know, there's litigation involved with that and I don't think that's going away. There are some headwinds here for Meta and it's not just an AI story. >> Yeah, I think you talked about analyst ratings with Microsoft. I don't want to move on to the next company without mentioning analysts are absolutely pulling back those price targets on Meta. I think there was a lot of bullishness about a year ago in Meta. I know uh our market beat analyst Thomas Hughes was one of those who was very bullish on Meta a little over a year ago, maybe even 18 months ago, and analysts were as well. We were seeing thousand price targets for the stock that's now trading at roughly half of that. And we're seeing those price targets adjust accordingly. I mean, just today we had uh several different price targets come out that are much closer to that 750 at best kind of price target range. If Meta is at 750 in the next 12 months, investors are going to be pretty happy when they're investing it at 535 today. But I think the fact that you're starting to see price targets go down now. What if they have another print that isn't as good? What if they have another one next time? And I and that's impossible to forecast right now. They they could absolutely blow it out of the water next time. We don't know. But I think the fact that you're seeing price targets get lowered is something that investors need to consider. Yeah, absolutely. I think that that is a good transition onto not not one of the mag seven from this week, but I just want to touch on Alphabet from last week as well. We had a similar kind of market reaction, not super positive uh reaction to the Google news last week. >> Yeah. And the funny thing is I think that Meta and Microsoft yesterday and the reaction that investors had to both of those I think it kind of puts Alphabet in context and it's it's that idea of Alphabet guided to higher capex. So that puts it more in the meta camp but they're also showing that they are monetizing it just maybe not at the same pace that people are seeing Microsoft monetize it. So, it's sort of like, you know, I don't want to use the analogy of threading the needle cuz I don't think that's accurate, but I mean, I think Microsoft gave investors that story that they wanted to hear, reasonable capex spending, not being raised, not necessarily being lowered, and showing that you have accelerating AI adoption, which is bringing revenue into it. And I don't think they're seeing that the speed of that revenue with with uh Alphabet yet, but I think certainly the report from Meta puts Apple or puts Alphabet, excuse me, in a little bit better light. And and in fairness, Alphabet is up 3.8% in the last five trading days. So, yes, it sold off pretty sharply after the report, but it was looks like it's coming back. And I think there's room for the stock to come back because I don't it wasn't an awful report. It was just the capex number hit people the wrong way. >> Yeah, that capex number again the theme of all of the mag seven stories right now is how much money these hyperscalers are spending on this buildout. And I want to talk about that before we get into kind of previewing what we're expecting for Amazon and Apple too because they're a part of this capex story in general. What we've been hearing from a lot of viewers is they're less interested in all of these names because of this capex spend because they're not the ones that are going to see the massive growth story. they're more interested in the companies that these companies are spending money on. And so let's talk about that kind of market ripple effect that we're getting from these MAG7 reports this week. Are we seeing that ripple effect further down the market and in other places right now? >> You know, to be honest, I don't really know because you're still seeing chip stocks have not really rebounded much. Software stocks are still getting hit. Um now today uh you're seeing a nice bounce back in iron which has a relationship with Microsoft. They're getting a little bit of they're getting not a little bit a big bump from that. So I think that investors are shying away from technology stocks in general. I think yes some money is going into more of that infrastructure play that that broader infrastructure story. um you are seeing a little bit of a rotation in small caps with the performance of the Russell and actually you're seeing somewhat of a flight to safety with some dividend stocks. Um Coca-Cola's had a big week this week, but I think it's just going to show that investors are looking at that and saying there might be something to the idea of let's go with a company that pays us along the way instead of a company where we're just relying on these quarterly reports to drive up stock price growth. Yeah, and I do want to mention that the rebound is pretty big in some areas today. We're seeing memory stocks bouncing back more than 15% as well, similar to what Microsoft's bounce back has been today, too. So, there's certain areas of the technology sector that have had massive pullbacks in just the last couple of weeks. Now, seeing a big one day bounce back today, but really is just continued volatility in this big tech sector. It's one of the reasons that Wall Street veteran Mark Chaen has that warning out right now to get rid of three AI names before that volatility gets even worse with that major announcement coming out on July 31st. So, if you want to check out that list again of those three AI names to get out of now and three different names that are actually buys to replace them with, scan the QR code, click the link in the description, and get that free information from Mark Jenin today. It's a really urgent warning to get the biggest benefit from those changes in your portfolio. So, you want to take a look at that special report as soon as you can. Now, Chris, I really want to get your take on this volatility and how long you think it could continue. We've really had an incredibly volatile summer, especially in the AI sector. Do you see that continuing throughout the rest of the year? >> I think the volatility can go on for some time. I think it's certainly going to go on for the remainder of the summer. Um, again, summer is is just a time when volume tends to be lighter. Institutional investors are not as engaged with the stock market. So, I think a lot of it's going to be let's wait and see what's going to happen when that money starts coming back in the market in September, which tends to be a very weak market, weak month for the market. And maybe we start seeing a change when these companies start reporting their next earnings report, which is going to be in October. I know investors don't want to hear that because it's, you know, three months away, but I think that's reality of the story is what you're going to start seeing, Bridget, is and I think Microsoft bears that out. I think investors are going to start becoming a lot more selective and they're going to start saying there are companies we're going to be willing to pay for because we see that they're actually delivering where good news is actually good news and where there's going to be other companies where they're going to be saying uh that news that you're reporting isn't good enough. And that is what we are absolutely seeing this earning season and the last couple of earning seasons of the market has such big expectations and they're looking for specific things. So I know this video is coming out after Amazon and Apple have reported but we are recording this at lunchtime. So a few hours before um they've actually reported. I want to talk about what you expect to see happen with the Amazon and Apple releases uh today too. Do we expect positive news for Amazon? What's your thought on Amazon to start with and then we'll move into Apple too. We've just laid out three different reports. You know, Alphabet's report, Meta's report, Microsoft's report. I suspect that Amazon's report's going to be similar to what you saw from Alphabet. I think they're going to probably be guiding to higher capex spending. And then the then the question is going to be, are they showing enough monetization? So, is the price action going to be more like what we saw with Alphabet or is it going to be more like what we saw with Microsoft? That's hard to say. Um, but Amazon is a business that has a little bit more of an alphabet feel to it and just in terms of all the levers that they can pull. Not to say Microsoft doesn't have levers to pull, but I think just in terms of the ad revenue and the AWS and now they've got Amazon Prime with Prime Video and all those things. So, I think there's a lot of different levers. Amazon's just a beast of a company. The question is going to be, are they showing that AI monetization? And I think that will depend. I let's just say I'll split the difference and say I don't think the I don't think the post earnings price action will be as aggressive as Microsoft, but I think it will be better than Alphabet. >> All right. And let's talk about Apple too. This has been the player that hasn't done much of anything in earnings the last few quarters. Do you expect an actual move in the the needle this time? >> So the question with Apple is, you know, Apple's been sort of that uh they've been the company that everybody was saying, well, what's their AI strategy? What's their AI strategy? what's their AI strategy? And now people are realizing that Apple's AI strategy was always in the palm of your hand. It was the iPhone, it was the iPad, it's the Apple Watch. It's the idea of saying we've got an ecosystem and that's ecosystem is what users are going to be using to run AI. So that's turning out to be a winning story for I for Apple. Question is going to be it's had a nice run lately. Is that priced into the stock? That's hard to say. It's up about 14.3% now in the month heading into the report. It's up 21% year-to date, uh 58% in the last year. So, it's been on a quite a rally. That tells me that there could be a little bit of a pullback after um after the company's earnings report. >> I think one thing to point out with all these Mac 7 stocks that we've talked about today is their one-year growth for investors is vastly different here. We're looking at uh Meta, Microsoft, and uh Amazon not really getting any kind of returns or even negative returns for investors in that one-year window. But then we look at Alphabet and Apple who both have about 60% uh returns over the last year for investors. So, some really different stories here uh in these these major mag seven companies. Why do you think that is in that one-year growth outlook? >> Two different reasons. Um, for Apple, the idea that demand for the iPhone was slumping was vastly overstated. But secondly was Apple wasn't getting into the capex race. They weren't they weren't trying to fight the capex battle. And at a time when investors were getting very nervous about all the capex that was being spent by these by the hyperscalers, rightly or wrongly, Apple wasn't playing that game. And I think they got rewarded for that. In the case of Alphabet, this was a company that was like the lagard in the Mag 7 last year and a lot of people were scratching their head wondering why. I mean, it just seemed like Alphabet was an obvious winner in the AI story and and yet it was seemed like it was just lagging. I think a lot of what we've seen in 2026 with Alphabet, at least prior to the earnings report, was a catch-up trade. I think people were just realizing that yeah, we have we've been ignoring the company that's actually doing very well in AI. I think the the earnings report, at least the initial reaction, the earnings report spooked some people because of the capex number, but I think now people are looking at Alphabet again and saying, "Okay, this is still a solid story." And again, it's just a name that's going to be part of the AI story for years to come. >> A good rundown on all of these major mag seven companies. We all know the last one, Nvidia, is still a few weeks away, but cover that as well when that comes out. Chris, thank you so much for the time today. And again, congrats to the Microsoft holders out there. It's been a good day for them. Hopefully some good news for Amazon and Apple as well. If you want to learn more about how this week's earnings could impact the rest of the market, make sure to watch this interview with Wall Street veteran Mark Jacen. He dives into how this week's earnings and all of the earnings season this quarter could really impact the market for the rest of the year ahead. It's an interview you don't want to miss. You can watch that full interview