📖 Alphabet and Microsoft opened the books

What’s going on here?

Microsoft and Google-owner Alphabet shared the stage late on Thursday to reveal their much-awaited results.

What does this mean?

As two of the biggest companies in the S&P 500, Microsoft and Alphabet’s success or failure could just about sink or float the index. Well, it’s not time for life jackets just yet. Microsoft’s revenue came in at $62 billion – 17% higher than the same period a year ago – and profit was sufficiently buoyant too, rising 20%. To top it off, the firm’s crucial cloud business, Azure, delivered 31% sales growth, overachieving on the 28% that analysts expected. Alphabet kept up just fine, with revenue of $81 billion – up 15% from a year ago – and profit that sailed past expectations. Google Search, YouTube, and Google Cloud didn’t miss a stroke, either. But Alphabet’s first-ever dividend made the biggest splash, helping send the stock up more than 12%.

Why should I care?

For markets: The race is on.

Not content to watch a small fry lead the next generation of technology, Microsoft and Alphabet have been rolling out their own AI services. So far, investors have been impressed with how Microsoft’s integrated its Copilot AI into its existing software suite. Google’s rollout, meanwhile, hasn’t been as smooth. And of course, there’s the worry that as folk use AI chatbots more, they’ll visit Google Search – a key source of revenue – much less.

The bigger picture: Standards are high.

If the Magnificent Seven chuck too much cash at AI, shareholders may worry about reckless spending or feeble bottom lines. Too little, and they could complain that the firms aren’t devoting enough time and money to the cause. That’s a hard balance to strike, made worse by the fact that inflation is pushing bond yields higher, making stocks look less attractive in comparison. That means investors won’t need much of a nudge to ditch expensive tech stocks if their results disappoint even a little.

What’s going on here?

Mining giant BHP Group proposed a buyout of British mining company Anglo American, in what would be the biggest mining deal in years.

What does this mean?

Anglo’s the proud owner of some of South America’s most coveted copper mines, as well as an 85% stake in diamond specialist De Beers. But despite usually having enough copper to wire an industrial city and diamonds to propose a million times over, Anglo was forced to cap production a few months back due to operational hiccups. Add in the threats facing the diamond market from lab-made rivals, and Anglo’s share price steadily declined last year. That was BHP’s cue to table a £31 billion ($39 billion) offer – 14% higher than Anglo’s valuation from before the announcement. Mind you, the dotted line is far from signed: the news could attract rival bidders, and governments might take issue with one entity controlling a tenth of the world’s copper.

Why should I care?

For markets: The industry’s copp(er)ed on.

That deal would make BHP the world’s biggest copper producer, and it’s the perfect time to hold that title. The metal is essential for renewable energy projects – so now that governments and companies are switching from fossil fuels, miners are dialing up their copper plans. They haven’t caught up with demand yet, though: supply is still too low, and without any sign of a sudden influx, copper’s price could hit the roof.

The bigger picture: The bare commodities.

The energy transition, escalating geopolitical tensions, and demographic shifts are creating unpredictable and lasting change in the global economy – not least by nudging inflation and, in turn, interest rates upward. So with no guarantee that yesteryear’s investments can hold up in tomorrow’s world, investors might want to scope out commodities. Their prices often rise as inflation does, so they may well pick up just as stocks and bonds let investors down.