Nasdaq 100 Forecast: Meta and Tesla Climb After-Hours While Microsoft Drops

Wall Street Slips as Earnings Take Center Stage; Futures Rise After-Hours

U.S. stocks pulled back on Wednesday as investors braced for key earnings reports from major tech firms. The Dow Jones Industrial Average fell 0.3%, while the S&P 500 and Nasdaq Composite each lost 0.5%.

After the market closed, Microsoft, Meta, and Tesla released earnings that sent mixed signals. Microsoft beat revenue estimates but disappointed with its forecast, while Tesla’s profit margins fell short. Meta surpassed revenue expectations but issued a weaker-than-anticipated first-quarter outlook.

Despite the cautious tone during regular trading hours, stock futures rose in after-hours trading. Nasdaq 100 futures gained 0.3%, and S&P 500 futures added 0.2%. Dow Jones futures also climbed 90 points. Meta and Tesla shares gained 2% and 4%, respectively, while Microsoft dropped more than 4%.

Why Did Microsoft Shares Slide Despite Beating Estimates?

Microsoft delivered a solid second-quarter earnings beat, with revenue reaching $69.63 billion versus the $68.78 billion expected. However, its outlook for Azure cloud growth fell short, triggering a 5% drop in the stock after hours.

Azure revenue rose 31%, slightly below expectations, and CFO Amy Hood projected further deceleration in the third quarter. Investors were also concerned about Microsoft’s rising capital expenditures, which hit $15.8 billion in the quarter and are expected to remain elevated throughout 2025.

Microsoft’s Intelligent Cloud segment posted $25.54 billion in revenue, up 19% but missing estimates. Its Productivity and Business Processes division, which includes Office and LinkedIn, exceeded forecasts with $29.44 billion in revenue. The More Personal Computing unit, housing Windows and Xbox, remained flat year-over-year at $14.65 billion.

CEO Satya Nadella emphasized AI’s role in Microsoft’s future, noting that 13 percentage points of Azure’s growth came from artificial intelligence. However, concerns over execution challenges and capacity constraints weighed on sentiment.

Is Meta’s AI Bet Paying Off?

Meta reported strong fourth-quarter revenue of $48.4 billion, topping Wall Street estimates of $47.0 billion. However, its first-quarter revenue guidance of $39.5 billion to $41.8 billion fell slightly below expectations, raising concerns about slowing momentum.

CEO Mark Zuckerberg remained optimistic about Meta’s AI strategy, despite growing competition from Chinese AI firm DeepSeek. The company expects to spend up to $65 billion in 2025 on AI infrastructure, a significant jump from $95 billion in total expenses last year.

Meta’s Reality Labs division, which focuses on metaverse projects, continued to lose money, posting a $5 billion loss in Q4. Still, its core advertising business remains strong, with daily active users reaching 3.35 billion across its platforms.

Can Tesla Reverse Its Profit Decline?

Tesla’s fourth-quarter results missed expectations, with revenue at $25.71 billion versus the estimated $27.26 billion. Automotive revenue fell 8% to $19.8 billion due to lower average selling prices across its Model lineup.

Net income dropped 71% from a year ago, partly due to a one-time tax benefit in the previous period. Operating margin contracted to 6.2%, down from 8.2% a year earlier. CEO Elon Musk reiterated his focus on Full Self-Driving (FSD) and robotaxis, promising the launch of an unsupervised FSD service in Austin by mid-year.

Despite the earnings miss, Tesla shares rebounded in after-hours trading, gaining 4%. The company expects vehicle growth to pick up again in 2025 but provided no specific guidance for the year ahead.

What’s Next for the Market?

Investors will closely watch upcoming economic data, including the latest job market reports and Federal Reserve commentary. With AI spending soaring across major tech firms, traders are weighing the sustainability of these investments against profitability concerns.

While Microsoft’s and Tesla’s forecasts introduced uncertainty, Meta’s strong ad revenue reassured some investors. As earnings season continues, the focus will remain on corporate outlooks and their implications for market momentum.

More Information in our Economic Calendar.