Alphabet Tanks on Disappointing Sales, Microsoft Gains, FedEx Slips

0:02 Bloomberg Audio Studios.

0:04 Podcasts. Radio. News. The Stock Movers Report. Your roundup of companies making moves in the stock market. Harnessing the power of Bloomberg data.

0:17 I'm Tim Senevec, along with Carol Master. Let's take a look at some stocks on the move.

0:22 And Alphabet is definitely on the move.

0:24 Let's start there. Google, of course. G-O-O-G-L is the ticker.

0:28 Shares are right now down about 8.9% as we speak. And this is after Alphabet posted disappointing revenue income.

0:36 And we've seen the stock under pressure.

0:38 So it reported quarterly sales and profit that fell short of expectations.

0:42 Sales of $ 111. 2 billion today.

0:45 A net income of $ 2. 12, $ 2. 12 a share. Company's equity investments generated an $ 8. 7 billion loss. Its search and related businesses, so important, generated $ 63. 4 billion in revenue. That was below the average estimate of $ 64.

1:00 9 billion.

1:02 And that speaks to, that's their core business. So the question is, all that's being spent on AI, what does it mean in terms of their search business? Or is it taking away from the profitability of their search business?

1:15 Cloud unit reported sales of $ 30. 7 billion and profit of $ 11. 1 billion. That, folks. Was above analyst estimates. The company did post negative free cash flow of $ 9. 1 billion in the third quarter.

1:27 As a user of Google products and services, I mentioned during our conversation with Ed and Anurag the way that the company has integrated over the last few months more AI into its products.

1:37 It happens so quickly.

1:38 Not just the search engine, not just YouTube, not just Gmail. You can do this in Google Maps as well and do natural language search. I haven't really mastered that one yet. That's an expensive thing to do. And that hasn't really justified the levels of spending and sales from the search division.

1:54 Yeah.

1:55 So we'll follow that one.

1:57 Hey, let's go on over to Microsoft because that one definitely on the move, but in the other direction.

2:01 Not as high as it was earlier.

2:03 Initially after the quarterly update, but Tim, it is still up about 2.3% here in the aftermarket. Yeah.

2:08 Better than expected cloud revenue. It suggests that the company continues to reap the benefits of its massive investment in AI and Azure sales grew 48% in the quarter that ended in September. Overall revenue increased 19% to $ 92.

2:21 3 billion.

2:22 As Carol mentioned, we saw shares higher in the after hours by as much as 4%, up in the after hours right now by about 2.3%. First quarter profit per share, excluding some items, was $ 4.

2:32 89.

2:32 The question about identity for Microsoft is like, okay, for so many years, this company created the operating system and the apps that lived on the PC operating system. And that was like the licensing was.

2:46 was absolutely massive.

2:48 How do you then integrate AI into those products in a way that keeps people paying for those subscriptions?

2:52 Somehow they're doing it, right? They're doing it.

2:54 At least investors are impressed with what they're doing. We're going to go on over to, of course, Microsoft MSFT. Let's go to FedEx. Ticker is FDX. Stock down about 1.9%. here in the aftermarket. This, even as the company boosted its outlook as momentum builds ahead of the holidays.

3:13 I feel like this is what we heard from UPS earlier in the week as well.

3:16 FedEx raised its profit and sales guidance for the year, adjusted earnings to be $ 18.

3:21 To $ 18.

3:21 60 a share in 2026. The company now sees revenue growth of about 12%, suggesting shipping demand is holding strong heading into the busy year and months. Of course, the holiday season shopping and shipping season. And FedEx suggested earnings rose to $ 3. 74 a share for the three months ending September 30th, with revenue and operating margin also improving. But a little bit of disappointment we're seeing here in the aftermarket.

3:46 Yeah, we did hear from UPS yesterday. UPS raised its outlook and its signal strength for the holiday season. So perhaps a little bit of a surprise seeing this stock reaction from FedEx. The parcel business has struggled to rebound from several years of stagnant demand. This over FedEx, pressured by inflation and tariffs. as well as a comedown from a pandemic-driven boom in e-commerce deliveries. But you're still getting a lot of packages, you said.

4:07 I'm getting a lot of packages. Who isn't?

4:09 I want to point out in some of our reporting, while the report was broadly positive, we're going back to FedEx. The stock was down in trading, possibly reflecting confusion about a change in FedEx's reporting calendar that made it difficult to compare with analyst estimates.

4:23 So maybe this is some clarity we'll get out.

4:25 Come on.

4:26 These Wall Street people are smart. They know. Can't you deal? They know how to compare.

4:31 Year over year versus quarter over quarter. What's the issue? I don't know.

4:35 What's the issue? Put it in the quad. It'll tell you the answer.

4:39 You got to keep in mind for FedEx, it's been a bit of a year of a transition. They recently spun off its freight division. They sold its supply chain unit. So they've been kind of trying to focus on their core parcel business.

4:50 Should we mention Ford real quick?

4:51 Yeah, we should mention Ford.

4:53 All right. So let's go to Ford taking a look at the stock in the aftermarket.

4:58 Down about 1.8%. 1.8% here in the aftermarket.

5:01 And that Ford lifting its outlook even as war inflation take a mounting toll on the company. So they are saying rising commodity costs expected to be at nearly $ 2.

5:11 5 billion headwind this year.

5:16 The Stock Movers Report from Bloomberg Radio. Check back with us throughout the day for the latest roundup of companies making news on Wall Street. And for the latest market-moving headlines, listen to Bloomberg Radio Live. Catch us on YouTube, Bloomberg.com, and on Apple CarPlay and Android Auto with the Bloomberg Business app.