• Major tech giants reported their quarterly performance this week, with AI and software growth sustaining their momentum due to heavy spending and demand.
  • IBM and Meta delivered strong earnings, lifting their share prices on rising demand for AI-related solutions.
  • Despite beating earnings expectations, Microsoft and Tesla faced headwinds. Microsoft reported a slowdown in Azure growth, while Tesla continues to struggle with softer deliveries amid intensifying competition.

Major technology companies reported quarterly earnings this week, with strong AI momentum supporting gains for some firms, while others faced investor concerns over rising costs and slowing growth. Results from IBM, Meta Platforms, Microsoft, and Tesla highlighted diverging trends across AI, cloud computing, and broader growth priorities.

IBM: Strong Gains from Software and AI

IBM reported stronger-than-expected earnings, with EPS at $4.52 versus forecasts of $4.32. Revenue rose to $19.7 billion, beating expectations of $19.23 billion, supported by continued strength in its AI-driven businesses. ⁽¹⁾ 

Software led the upside, with the segment posting 14% growth in Q4 on solid demand for automation, data, and related products. Infrastructure revenue also climbed 21%, driven by a sharp 67% year-on-year increase within the segment. ⁽¹⁾ 

The company’s generative artificial intelligence business generated more than $12.5 billion, CEO Arvind Krishna said in a release. Less encouragingly, analysts flag deceleration in the hybrid cloud division, while revenue from infrastructure operations is expected to fall. IBM’s consultancy division is also pressured by tough competition and threats to demand. ⁽²⁾

IBM expects full-year revenue growth to exceed 5%, decelerating from 8% last year. Free cash flow should increase by $1 billion after reaching $14.7 billion in 2025.  ⁽³⁾

Meta Platforms: Solid Results Despite High Expenses

Meta Platforms reported solid fourth-quarter earnings, with shares rising nearly 9% in after-hours trading. Momentum remained strong in Q4, supported by robust advertising performance. ⁽⁴⁾

Earnings per share came in at $8.88, beating forecasts of $8.23, while revenue reached $59.89 billion, surpassing expectations of $58.59 billion. Advertising, which typically accounts for around 97% of Meta’s total revenue, grew 18% in the quarter, reinforcing the company’s earnings strength. ⁽⁴⁾

Positive results are likely to be tempered by accelerating cost pressures. In Q4, expenses rose 40%, exceeding analyst expectations. Around half of the increase came from higher research and development spending, driven by an aggressive hiring push to attract top AI talent and establish a new AI lab. Capital expenditure also increased, with significant investment directed toward building AI-focused data centers to support Meta’s internal infrastructure and long-term AI strategy. ⁽⁵⁾

Microsoft: Results Beat Expectations, But Azure Growth Comes Up Short

Microsoft beat earnings expectations, reporting EPS of $4.14 versus forecasts of $3.97, while revenue reached $81.27 billion, exceeding estimates of $80.27 billion.

Despite the earnings beat, the stock came under pressure as investors focused on Azure cloud performance. The company guided for quarterly Azure growth of 37%, slightly below expectations of 37.1%. Azure revenue grew 39% during the quarter, above estimates of 37.8%, but marked a modest slowdown from the prior quarter’s 40% growth. Operating margins also came in below expectations, adding to investor caution. ⁽⁶⁾

Microsoft CFO Amy Hood said the company expects Azure revenue growth to range between 37% and 38% next quarter. Total revenue is forecast between $80.7 billion and $81.8 billion, broadly in line with analysts’ expectations of $81.2 billion.

Like its peers, Microsoft continues to invest heavily in AI infrastructure. Capital expenditure reached $37.5 billion for the quarter, exceeding estimates of $36.7 billion, underscoring the scale of its AI-related spending. ⁽⁷⁾

Tesla: Margins Help Beat Expectations, But Challenges Remain

Tesla reported better-than-expected fourth-quarter earnings, with EPS at $0.50 versus forecasts of $0.45. Revenue reached $24.9 billion, slightly above expectations of $24.79 billion, though it continued to decline for a third consecutive quarter. ⁽⁸⁾

Tesla said it plans to invest $2 billion in xAI, the private AI firm founded by CEO Elon Musk, while shifting part of its focus from vehicle production toward manufacturing robots.

The sustainability of Tesla’s margins remains uncertain. Vehicle sales have softened in recent quarters amid intensifying competition, most notably from BYD in China. Earlier this month, Tesla reported a 16% drop in fourth-quarter deliveries and an 8.6% decline for the full year. ⁽⁹⁾

Tesla also faced many problems in 2025, which were related to CEO Elon Musk’s work with President Trump including his political ties and supporting far-right political parties in Europe, which caused consumers to hurt Tesla’s brand.

Part of the decline also came from Tesla’s aging lineup. In the earnings call, Musk said Tesla would end production of its Model S and X vehicles, which were launched in 2012 and 2015.

Sources: ⁽¹⁾ ⁽²⁾ ⁽³⁾ ⁽⁴⁾ Dow Jones Newswire, ⁽⁵⁾ ⁽⁶⁾ ⁽⁷⁾ CNBC, ⁽⁸⁾ ⁽⁹⁾ Reuters,