Once again, the stock market struggled during ‘Powell Fed Day.’ It was tough getting around the double talk on labor and even inflation, and waiting on data to be prepared to step up and protect the public from inflation yesterday. Perhaps sensing what would happen after the close, the Artificial Intelligence (AI) umbrella lifted Utilities (XLU), Technology (XLK), and Communication Services (XLC).

Meta Platforms (META)

• Revenue $47.52 billion, consensus $44.83 billion
• Earnings $7.14, consensus $5.89

Growth

• Digital Adoption Platform (DAP) +6%
• Ad impressions +11%
• Avg. price per ad +9%
• Revenue +22%
• Earnings Before Interest and Taxes (EBIT) +38%
• Operating Margin 43% from 38% year ago
• Earnings Per Share (EPS) +38%

The stock has surged more than 700% since the Metaverse snafu that led investors to walk away in 2022. Now, it’s a juggernaut, but it could shift into an even higher gear.

"I'm excited to build personal superintelligence for everyone in the world." - Mark Zuckerberg.

Microsoft (MSFT)

• Revenue $76.4 billion, consensus $74.2 billion
• Earnings $3.65, consensus $3.38
• Operating Margin 45.0% +2 percentage points

Capital Expenditures (Cap-Ex) continue to surge based on demand, not on hunches.

The company also gave a shout-out to quantum computing.

Cloud revenue growth is beyond anyone’s wildest dreams.

There are so many earnings reports to sift through. For the most part, we are doing great (got out of Astera Labs (ALAB) early – which underscores the difficulty of judging these juggernauts that are moving around, even with some of our metrics that are not traditional).

Momo and growth caught bids yesterday; they will blaze a trail today.

Today’s Session

Inflation is slightly higher than consensus estimates, but not the doom and gloom promised, and still hoped for on Wall Street.

Core is at the same level as the last time the Fed cut rates.

As for the market, the question is whether the AI revolution will spark in other sectors besides:

• Technology (XLK)
• Communication services (XLC)
• Utilities (XLU)
• Industrials (XLI)

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