Insider Today: Meta's monster earnings win

Plus: Fed rate predictions, and AI salaries revealed.

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February 2, 2024 • 5 min read with Dan DeFrancesco Happy Groundhog Day! Here’s hoping Punxsutawney Phil doesn’t disappoint us the way Sephora bummed out some of its employees by giving them a “stale” cookie after hitting $10 billion in revenue.  In today’s big story, we’re recapping earnings from three tech giants: Meta, Apple, and Amazon. What's on deck Markets: We’ve got predictions on when the Fed will start cutting rates after Jerome Powell’s hawkish remarks. Tech: What’s hot, and what’s not, in cloud tech these days. Business: The video game industry is running out of lives. But first, Zuck gets a W.

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Josh Edelson/AFP/Getty Images ; Isabel Fernandez-Pujol/ BI The big story Meta’s mega-win Mark Zuckerberg has had quite the week. On Wednesday, the Meta CEO was forced to publicly apologize to the families of children harmed by the effects of social media during a brutal congressional hearing.  A little over 24 hours later, investors were cheering on his company following a monster earnings report.  Meta reported big increases in revenue (16%), operating income (62%), and profits (69%) in 2023. It also announced plans to issue dividends for the first time and conduct $50 billion in stock buybacks, writes Business Insider’s Sarah Jackson. That helped Meta’s share price surge more than 14% at times during after-hours trading. Meta also proved incredibly efficient in 2023, just like Zuckerberg promised. It spent $3.5 billion in 2023 getting smaller by closing and consolidating offices and laying people off. The result was a company with much better margins, BI’s Peter Kafka writes.  (To be sure, Meta’s still burning cash in some areas, as Peter points out. It lost $16 billion on the Metaverse in 2023, and Zuckerberg indicated more pain for years to come.) But even investments in the Metaverse, long a sore spot for Wall Street, can’t sour the mood now that Zuckerberg has been able to cut costs, Peter told me. Following the success of Meta's "Year of Efficiency," Zuckerberg said that the company may never go back to large-scale hiring. After such a strong turnaround, Meta will also likely become the blueprint other tech companies try to follow as job cuts spread throughout the industry, including at one of its biggest peers. Richard Drew/AP Meta shared its big day with two other members of the Magnificent 7: Apple and Amazon. Apple’s profit and revenue for its fiscal first-quarter earnings beat Wall Street estimates. It also snapped four straight quarters of revenue declines.  But all eyes were on how it fared in China, where the company has faced headwinds in the form of a thriving local rival and continued geopolitical tensions between the US and China.  Wall Street’s worries were warranted. Apple saw a 13% year-over-year decline in China sales, leading to a dip in its share price in after-hours trading.  Things were much rosier over at Amazon. The company crushed its fourth-quarter earnings-per-share estimates, in addition to offering first-quarter guidance for net sales and operating income on the high end of forecasts. Like Meta, Amazon saw improvements to its bottom line thanks to cost-cutting efforts throughout the year. However, after cutting at least 27,000 jobs since late 2022, Amazon's CFO declined to say that layoffs were over — and hinted that more cuts might be on the table.  We also got a look at Rufus, Amazon’s new AI chatbot. It's meant to answer customer questions, make recommendations, and discover new products. Back in October, BI’s Eugene Kim reported Amazon was working on a secret AI-powered plan to change how its customers shopped.

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3 things in

Markets 🔔 Before the opening bell: US stock futures rise early Friday following Big Tech earnings. Investors now await January's Non-Farm Payrolls report. Aaron Schwartz/Xinhua via Getty Images 1. What to expect when you're expecting... rate cuts. Fed Chair Jerome Powell threw cold water on the market’s hope of a March rate cut. Now Bank of America is targeting June as the likely landing spot for the Fed’s first cut. Santander’s chief economist thinks we’ll have to wait until after the US presidential election. But Fundstrat’s Tom Lee still thinks we’re on track for a March cut. 2. The stock market could be on track for a correction. Technical analyst JC Parets of All Star Charts said now is a good time for investors to short stocks, as February has historically been one of the worst months of the year for the market. Parets pointed to investors pouring into defensive assets like the consumer staples sector and US Treasury Bonds. 3. The Magnificent — and Not-So-Magnificent — 7. Piper Sandler's Michael Kantrowitz, a top portfolio strategist, does not view all the Magnificent 7 stocks equally. Some have plenty of upside (Apple), others are more risky holds (Nvidia), and the rest sit somewhere in the middle (Amazon). Here’s where he lands on them.

3 things in

Tech Apple 1. Apple Vision Pro features have been revealed. One, dubbed “goofy" and "awful" by some online commenters, displays an image of your eyes on its screen, for some reason. Microsoft also announced that its full suite of Office apps — including Copilot — will be available on the headset. And we finally got to see the man himself, Tim Cook, wearing the headset. 2. How much do employees at top AI firms earn? Business Insider analyzed salary data from 16 of the top artificial-intelligence companies in the US and Europe. Industry leaders like CoreWeave and Databricks offer base salaries of over $200,000 for some roles. 3. Hot or Not: Cloud edition. The cloud industry is splitting into two distinct parts. First, there’s the "AI Cloud" future (hot), which is exciting investors. Then there’s the legacy "Cloud 1.0" business (not), which is losing its appeal.

3 things in

Business Courtesy of Diem; Lex; Confrey 1. Introducing social media’s new guard. Americans are lonelier than ever. The founders of these 18 startups are using their social networks to bring us closer together. 2. Executive pay cuts probably wouldn’t prevent layoffs, an expert says. It’s a common question when employees get let go: Why don’t our leaders just downsize their cushy salaries? According to a former VP at Microsoft, even if they did take a pay cut, it wouldn’t make enough of a difference. 3. The video game industry is in trouble. Sales and usage are slumping, layoffs are climbing, and there’s no solution on the horizon. The downturn could be from a post-pandemic slowdown, or changes Apple made that affected the mobile-games business.

In other news How Trump's "I'm rich" boasts are coming back to bite him in court. Sen. Warren asks Justice Department to consider nixing Corizon's bankruptcy. The Wall Street Journal made deep cuts to its DC bureau and insiders are calling it a 'bloodbath'.

What's happening today Today’s earnings: Chevron Corporation, ExxonMobil, Cigna, and other companies are reporting. The Apple Vision Pro is now available at all US Apple Store locations.

The Insider Today team Dan DeFrancesco, deputy editor and anchor, in New York. Hallam Bullock, editor, in London. Jordan Parker Erb, editor, in New York. Get in touch insidertoday@insider.com To read unlimited articles, subscribe to Business Insider. Download the Insider app Email sent to: mrkay@idiot.cloudns.cc Manage your email preferences | Unsubscribe | Terms of service | Privacy policy | Advertise with us © 2024 Insider Inc. 1 Liberty Plaza, New York, NY 10006