Breakfast News: Microsoft Sinks as Spending Soars
January 29, 2026
| Wednesday's Markets |
|---|
| S&P 500 6,978 (-0.01%) |
| Nasdaq 23,857 (+0.17%) |
| Dow 49,016 (-0.02%) |
| Bitcoin $88,976 (-0.21%) |
Source: Image created by Jester AI.
1. MSFT Dips 5% as Capex Hits $37.5 Billion
Microsoft (MSFT +0.51%) fell over 5% ahead of the market open after quarterly results disappointed some investors, with Azure cloud revenue growth of 39% and capex spending rising by 66% versus last year.
- "We are only at the beginning phases of AI diffusion and already Microsoft has built an AI business that is larger than some of our biggest franchises": CEO Satya Nadella sought to reassure the market against AI bubble fears, with orders booked for the cloud-computing business exceeding capacity.
- "An allocated capacity guide about what we can deliver in terms of Azure revenue": CFO Amy Hood addressed concerns about the return on investment from Azure, noting the company is focused on making long-term decisions.
2. Tesla, Meta, and IBM Rally on Results
- Tesla (TSLA +0.31%) rose 2% in pre-market trading after results showed a greater focus on AI, software, and next-generation products. Spending is expected to ramp up by $20 billion next year, with CEO Elon Musk noting "we're making big investments for an epic future." The stock is beating the S&P 500 by 145% since the April 2024 Hidden Gems recommendation.
- Meta Platforms (META 0.43%) soared over 6% ahead of the opening bell thanks to quarterly earnings highlighting strong momentum. CEO Mark Zuckerberg said he thinks "2026 is going to be the year that AI starts to dramatically change the way that we work."
- IBM (IBM +0.10%) jumped over 7% before the market open after impressive results. Last month, Motley Fool co-founder and CEO Tom Gardner praised the business, saying "IBM is deploying capital in ways that could accelerate its growth in the years to come."
3. Mineral Stocks Dive on Policy Shift
Reuters reports the U.S. administration is walking back on plans to guarantee a minimum price for critical minerals projects, causing stocks such as MP Materials (MP +0.21%) and United States Antimony Corp (UAMY 2.12%) to fall as much as 10% in early hours trading.
- Previous price support used to bolster production levels: The shift is being blamed on pressures with congressional funding and the difficulty when it comes to setting market pricing.
- "Today's Reuters report is inaccurate, misleading and inconsistent with the facts": MP Materials rebutted the claims made, and posted on social media the reporting was speculative in nature, causing "unnecessary confusion in the marketplace."
4. Pre-Market Hidden Gems Earnings
- Tractor Supply (TSCO 0.96%) fell over 5% after results came in below expectations, with the company citing “a shift in consumer spending” as net income was flat with the prior year.
- Mastercard (MA +0.18%) is expected to show payment volume growth from the previous quarter, with investor interest in stemming the tide of rising expenses. The business has beaten revenue estimates each time for the past two years.
- L3Harris Technologies (LHX 0.07%) dropped over 5% as quarterly sales missed estimates, but CEO Christopher Kubasik noted “a record backlog and strong demand signals” for 2026.
5. Your Take
After the closing bell, we'll have earnings from three more previous Hidden Gems recommendations in Apple (AAPL 0.56%), Deckers (DECK 2.62%), and Visa (V +0.53%).
If your portfolio comprised just these three companies, and you bought each of them at the start of the year with the same amount of money, and had to buy more shares in one, completely close your position in another, and hold the final stock, what are you choosing to do?
Debate with friends and family, or become a member to hear what your fellow Fools are saying!
