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Forbes
2 days ago
- Business
- Forbes
Why Big Tech's AI Billions Are Being Rewarded Unevenly
On July 30, Microsoft's market cap briefly soared past $4 trillion after the company reported another earnings beat. CEO Satya Nadella credited Azure's AI-driven growth and surging demand for copilot, telling investors the company was 'well-positioned to lead in the new era of AI-infused productivity,' according to its Q4 earnings call transcript. A day later, Meta's stock surged more than 8% after it reported ad revenue growth of 17% year-over-year and outlined new AI-powered tools for advertisers, details also captured in the Q2 earnings call transcript. On the other side of the divide, the mood was far less exuberant for Amazon and Apple. Both beat Wall Street's earnings expectations, but their stock moves were muted — and in Amazon's case, 'shares slipped despite reporting $147 billion in revenue. Apple unveiled 'Apple Intelligence' for iPhones, iPads and Macs, but offered few specifics on rollout or monetization. The contrast wasn't about who spent the most on AI. It was about which companies could convincingly connect that spending to measurable business results. That shift — from hype to proof — is redefining how the market judges AI investments. And that split is getting much harder to ignore across the industry. The AI Accountability Era When I asked what the recent earnings call by these four tech behemoths meant for the AI industry, Shekhar Natarajan, CEO of Orchestro, described it in blunt terms, calling it the new reality. 'Microsoft and Meta won because they mastered the art of AI storytelling with receipts,' he told me. 'Microsoft essentially turned OpenAI into the world's most expensive enterprise sales tool — every Azure deal now comes with an AI fairy tale that CFOs actually believe. Meta took the opposite approach: they made AI so invisible that advertisers don't even realize they're paying premium rates for algorithmic wizardry.' In contrast, he said, Amazon and Apple are 'AI rich, narrative poor.' Amazon 'built the most sophisticated AI infrastructure on the planet and somehow made it sound boring,' while Apple 'spent billions making Siri slightly less embarrassing and called it revolutionary.' That, Natarajan argued, is no longer enough. 'We've entered what I call the 'AI accountability era' — where investors have figured out that 'synergies' and 'transformation' don't pay dividends, but revenue does. The market essentially said: 'Cool demo, where's the recurring subscription model?'' This shift is merciless for companies still leaning on AI as a catch-all talking point. 'The next 12–18 months will be a bloodbath for AI tourism — expect pivots from 'AI-powered everything' to 'AI-profitable something specific,'' Natarajan noted. What Investors Reward Now Guy Dassa, AI expert and investment partner at OurCrowd, agrees the earnings gap isn't about AI spend levels, but about visibility and execution. 'The market is no longer rewarding AI spending in a vacuum, it's rewarding clarity, execution, and monetization,' he explained. Microsoft tied its AI investments directly to Azure's revenue growth and to customer adoption of copilot across office and enterprise workflows. Meta demonstrated that AI-driven ad targeting and content recommendations are keeping users engaged and advertisers spending more. Amazon and Apple, Dassa said, were 'more opaque' — investors heard about model development and branding, but saw little in the way of measurable revenue attribution. 'Yes, we're entering a post-hype phase,' he added. 'The narrative is shifting from potential to performance. Investors are asking: Where is the revenue? Where is the efficiency gain? Where is the user growth? Companies can no longer get by with vague promises or flashy demos — they need to show productized AI, enterprise adoption, or embedded monetization.' According to IDC, companies are now generating an average of $3.50 in value for every $1 spent on AI, with more than 90% of initiatives delivering measurable returns within 18 months. In practical terms, Dassa explained, that means investor decks will focus less on model size and more on use case adoption, margin expansion and defensible infrastructure. 'AI is no longer a strategy; it's an execution layer,' he added. The New AI Differentiator If 2023 was about who had the biggest model, 2025 is about who can deploy one seamlessly at scale. 'Here's the dirty secret nobody talks about: Building great AI models is now table stakes,' said Natarajan. 'Every teenager with a GitHub account can fine-tune GPT. The real money is in the unglamorous stuff — who can serve a model in 50 milliseconds instead of 500, who can handle inference spikes without melting their data centers.' That's where infrastructure maturity becomes visible in market performance. Dassa noted that Microsoft's lead in enterprise AI is underpinned by Azure's GPU access, inference optimization and integration pipelines — capabilities it has been quietly scaling for years. Meta's advantage comes from running AI models across one of the most extensive proprietary stacks in tech, tuned for ad delivery at global scale. 'Meanwhile,' Dassa noted, 'companies without robust infrastructure or with unclear integration plans are struggling to convince investors they can translate models into money.' The analogy Natarajan draws is to the internet boom of the late 1990s. 'Everyone focused on websites while the real winners were building CDNs and payment processors,' he said. 'Today's AI infrastructure leaders are tomorrow's Cloudflares and Stripes.' AI Execution Needs People Capital spending alone won't win the next phase of AI adoption. Kieran Corbett, venture partner at Geek Ventures, put it plainly: 'CAPEX for CAPEX sake will no longer be tolerated by shareholders, tangible growth and execution is what will be rewarded by further capital. Where so much of this AI spend is now being spent on is the talent race to enable effective execution and this doesn't look like it'll slow down.' In other words, execution isn't just about GPUs and data centers. It's about whether a company can attract and retain the talent to turn its AI investments into differentiated products, integrated workflows and sticky revenue streams. That talent race is intensifying, particularly for engineers who can bridge the gap between research and deployment. And for public companies, the stakes are higher than just quarterly earnings calls. Miss the execution mark now, and it's not only market cap that suffers, but also the competitive positioning for the rest of the decade. Time To Build Real Stuff Microsoft and Meta didn't simply benefit from favorable market winds this quarter. They earned investor confidence by pairing clear AI narratives with visible revenue impact, backed by infrastructure and teams that can deliver at scale. Amazon and Apple may close that gap in future quarters, but Q2 sent a message the market won't soon forget: the AI free ride is over. As Natarajan put it, 'We funded your AI fantasy camp. Time to build an AI business.'
Yahoo
2 days ago
- Business
- Yahoo
Artivion Second Quarter 2025 Earnings: Beats Expectations
Explore Artivion's Fair Values from the Community and select yours Artivion (NYSE:AORT) Second Quarter 2025 Results Key Financial Results Revenue: US$113.0m (up 15% from 2Q 2024). Net income: US$1.35m (up from US$2.12m loss in 2Q 2024). Profit margin: 1.2% (up from net loss in 2Q 2024). EPS: US$0.03 (up from US$0.051 loss in 2Q 2024). Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. All figures shown in the chart above are for the trailing 12 month (TTM) period Artivion Revenues and Earnings Beat Expectations Revenue exceeded analyst estimates by 4.6%. Earnings per share (EPS) also surpassed analyst estimates. Looking ahead, revenue is forecast to grow 11% p.a. on average during the next 3 years, compared to a 8.2% growth forecast for the Medical Equipment industry in the US. Performance of the American Medical Equipment industry. The company's shares are up 32% from a week ago. Risk Analysis What about risks? Every company has them, and we've spotted 1 warning sign for Artivion you should know about. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
5 days ago
- Business
- Yahoo
Exact Sciences (NASDAQ:EXAS) Reports Strong Q2 But Stock Drops 15.2%
Diagnostic company Exact Sciences Corporation (NASDAQ:EXAS) reported Q2 CY2025 results exceeding the market's revenue expectations , with sales up 16% year on year to $811.1 million. The company's full-year revenue guidance of $3.15 billion at the midpoint came in 1.7% above analysts' estimates. Its non-GAAP profit of $0.22 per share was significantly above analysts' consensus estimates. Is now the time to buy Exact Sciences? Find out in our full research report. Exact Sciences (EXAS) Q2 CY2025 Highlights: Exact Sciences will pay $75 million in cash (plus up to $700 million in additional payments) to secure the rights to Freenome's blood-based screening tools for colorectal cancer. Exact will also pay royalties up to 10% and $20 million annually for the next three years in joint R&D costs Revenue: $811.1 million vs analyst estimates of $773.1 million (16% year-on-year growth, 4.9% beat) Adjusted EPS: $0.22 vs analyst estimates of $0.05 (significant beat) Adjusted EBITDA: $138.2 million vs analyst estimates of $108.7 million (17% margin, 27.2% beat) The company lifted its revenue guidance for the full year to $3.15 billion at the midpoint from $3.10 billion, a 1.8% increase EBITDA guidance for the full year is $465 million at the midpoint, above analyst estimates of $437.4 million Operating Margin: -0.3%, up from -3.8% in the same quarter last year Free Cash Flow Margin: 5.8%, down from 10.2% in the same quarter last year Constant Currency Revenue rose 16% year on year (12.4% in the same quarter last year) Market Capitalization: $8.93 billion 'The Exact Sciences team continues to build momentum, advancing our mission through earlier detection,' said Kevin Conroy, chairman and CEO. Company Overview With a mission to detect cancer earlier when it's more treatable, Exact Sciences (NASDAQ:EXAS) develops and markets cancer screening and diagnostic tests, including its flagship Cologuard stool-based colorectal cancer screening test. Revenue Growth A company's long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Exact Sciences's 21.1% annualized revenue growth over the last five years was excellent. Its growth beat the average healthcare company and shows its offerings resonate with customers. We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Exact Sciences's annualized revenue growth of 13% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. We can better understand the company's sales dynamics by analyzing its constant currency revenue, which excludes currency movements that are outside their control and not indicative of demand. Over the last two years, its constant currency sales averaged 13.3% year-on-year growth. Because this number aligns with its normal revenue growth, we can see that Exact Sciences has properly hedged its foreign currency exposure. This quarter, Exact Sciences reported year-on-year revenue growth of 16%, and its $811.1 million of revenue exceeded Wall Street's estimates by 4.9%. Looking ahead, sell-side analysts expect revenue to grow 11.8% over the next 12 months, similar to its two-year rate. Despite the slowdown, this projection is noteworthy and indicates the market is forecasting success for its products and services. Unless you've been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) stock benefiting from the rise of AI. Click here to access our free report one of our favorites growth stories. Operating Margin Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It's also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes. Although Exact Sciences broke even this quarter from an operational perspective, it's generally struggled over a longer time period. Its expensive cost structure has contributed to an average operating margin of negative 29.8% over the last five years. Unprofitable healthcare companies require extra attention because they could get caught swimming naked when the tide goes out. It's hard to trust that the business can endure a full cycle. On the plus side, Exact Sciences's operating margin rose by 29.2 percentage points over the last five years, as its sales growth gave it operating leverage. Zooming into its more recent performance, however, we can see the company's margin has decreased by 16.6 percentage points on a two-year basis. If Exact Sciences wants to pass our bar, it must prove it can expand its profitability consistently. Exact Sciences's operating margin was negative 0.3% this quarter. Earnings Per Share Revenue trends explain a company's historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions. Although Exact Sciences's full-year earnings are still negative, it reduced its losses and improved its EPS by 33.1% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability. In Q2, Exact Sciences reported adjusted EPS at $0.22, up from negative $0.06 in the same quarter last year. This print easily cleared analysts' estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street is optimistic. Analysts forecast Exact Sciences's full-year EPS of negative $0.33 will flip to positive $0.73. Key Takeaways from Exact Sciences's Q2 Results Exact Sciences will pay $75 million in cash and make up to $700 million in additional payments to secure the rights to Freenome's current and future blood-based screening tools for colorectal cancer. Exact will also pay sales royalties up to 10% and $20 million annually for the next three years in joint research and development costs. So do we think Exact Sciences is an attractive buy at the current price? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it's free. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
31-07-2025
- Business
- Yahoo
F5 CEO breaks down big Q3 earnings beat
F5's (FFIV) third quarter product revenue grew 26%. That helped fuel the stock, which rose nearly 5% on Thursday. François Locoh-Donou, F5 CEO and President, joins Asking for a Trend to break down the results. To watch more expert insights and analysis on the latest market action, check out more Asking for a Trend. F5 reporting solid third quarter results on Wednesday, beating analyst estimates on the top and bottom lines. Here to walk us through the report is F5 CEO Francois Loco de No. Francois, good to see you as always. Um, you reported, Francis, our Q3 results beat. You raised your full year forecast for revenue growth. Investors like what they saw. Your your stock jumped about 5% today, Francois, and today's trade. Walk us through that report. What What are you seeing in the business? Well, we had a very strong quarter, Josh, and the the one big takeaway of the quarter is we had 26% product revenue growth in the quarter, which is the strongest we've had in over 14 years. And if you look at what's driving those trends, it's really two things. One is large enterprises moving to hybrid and multi-cloud architectures. And really F5 has been working to position the company for this hybrid and multi-cloud world uh for for several years now. And we are seeing the benefits of these investments in customers that want to be supported in software as a service, in hardware, and in software, and F5 being the only company that can do all of that. And then the second uh trend that we're seeing with large enterprises is adoption of AI, of course, and getting their infrastructure ready for AI. And those trends are also starting to become tailwinds for F5, uh because we have the ability to move massive massive amounts of data uh at speed and and do so when enterprises are trying to connect data stores to AI models. And so those two are are becoming tailwinds in our business and and reflected in the results that we saw yesterday. You're kind of leading me where I want to go, Francois, because in in terms of momentum for your business, I I wanted to ask you more about what is sort of driving that, whether that's simply a, you know, a tech refresh of your install base, Francois, or no, it's it's it's AI. It's something new developing here. Well, you know, tech refresh of our install base is a catalyst and has been strong because we had customers who, you know, a a couple of years ago had been sweating their assets and we're we are seeing uh a snapback of of that and a bit of a catch up on on customers that had not done that. But actually, the strength we're seeing in the business actually goes well beyond that. We're seeing these trends in uh reinvestment in data centers. You know, data center modernization, customers that thought they would go all the way in the cloud, they've gone to the public cloud, they've repatriated applications, and they are now embracing these postures where they're going to have applications in data centers and applications in public cloud, and they need uh partners that can support them across these multiple infrastructure environments. And that's precisely where F5 shines is the ability to support across all these environments. So that's also providing a tailwind in in our business. And then AI is a nacent trend, uh a newer trend that's not yet uh really um material to to the numbers we're seeing now, but we're starting to see really exciting wins uh, you know, in delivering data from data stores to AI models or securing AI applications, and we think that that market is going to grow substantially over the next few years. How is the competitive landscape evolving, Francois? You know, I think of rivals for you, Akamai, Cloudflare. I mean, how is it evolving? What are your competitive advantages? You know, if you look at each delivery model, uh, you know, whether it's hardware or software or software as a service, for each of these delivery models, we will have a different set of competitors. Where we have really virtually no competition is in our ability to support customers in all three delivery models. And we're already seeing that in, you know, a number of wins we had this quarter where a customer may have had a single vendor for SAS security uh or another vendor for hardware uh support in their data center, and they wanted to consolidate on a single vendor, and they are able to consolidate on F5 because of the platform strategy that we've put together, a platform we call our Application Delivery and Security platform, which brings all three of these delivery models together for customers and greatly simplifies uh the complexity that they deal with of delivering and securing all of these applications and APIs every single day. Final question, Francois. Just curious, are are you seeing any kind of macro or tariff-related impact on the business? We have not. As it relates to F5 specifically, we we have architected our supply chain to be very resilient, and so we're we're not getting an impact in terms of supply for F5 uh with tariffs. And in terms of our customers, Josh, if I go back 90 days ago, uh there was quite a bit of uncertainty uh as to whether where things were going to go, and we were a little worried that customers in the face of uncertainty uh would start to temper a little bit their spending. We have not seen any change in in buying patterns or behaviors uh from our customers as it relates to tariffs or the macro environment. So things are pretty stable right now. Francois, always good to see you. Always good to have you on the show. Thank you, sir. Thank you. Related Videos Big Tech earnings surprise, jobs report focus: Market takeaways Coinbase, Reddit, Strategy: After-hours earnings movers Why this analyst gives Amazon's earnings report a B+ Apple Shares Attractive After Sales Beat: Neuberger's Flax Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
31-07-2025
- Business
- Yahoo
ResMed (NYSE:RMD) Surprises With Q2 Sales
Medical device company ResMed (NYSE:RMD) beat Wall Street's revenue expectations in Q2 CY2025, with sales up 10.2% year on year to $1.35 billion. Its non-GAAP profit of $2.55 per share was 3% above analysts' consensus estimates. Is now the time to buy ResMed? Find out in our full research report. ResMed (RMD) Q2 CY2025 Highlights: Revenue: $1.35 billion vs analyst estimates of $1.33 billion (10.2% year-on-year growth, 1.3% beat) Adjusted EPS: $2.55 vs analyst estimates of $2.48 (3% beat) Adjusted EBITDA: $542.9 million vs analyst estimates of $494.7 million (40.3% margin, 9.8% beat) Operating Margin: 33.7%, up from 31.2% in the same quarter last year Free Cash Flow Margin: 37.7%, up from 33.9% in the same quarter last year Constant Currency Revenue rose 9% year on year (10% in the same quarter last year) Market Capitalization: $40.61 billion 'Our strong finish to fiscal year 2025 reflects ongoing momentum across our business, driven by robust global demand for our market-leading sleep and breathing health devices, as well as our expanding digital health ecosystem,' said Resmed's Chairman and CEO, Mick Farrell. Company Overview Founded in 1989 to address the then-underdiagnosed condition of sleep apnea, ResMed (NYSE:RMD) develops cloud-connected medical devices and software solutions that treat sleep apnea, COPD, and other respiratory disorders for home and clinical use. Revenue Growth A company's long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, ResMed's sales grew at a decent 11.7% compounded annual growth rate over the last five years. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers. We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. ResMed's annualized revenue growth of 10.4% over the last two years is below its five-year trend, but we still think the results were respectable. ResMed also reports sales performance excluding currency movements, which are outside the company's control and not indicative of demand. Over the last two years, its constant currency sales averaged 10.3% year-on-year growth. Because this number aligns with its normal revenue growth, we can see that ResMed has properly hedged its foreign currency exposure. This quarter, ResMed reported year-on-year revenue growth of 10.2%, and its $1.35 billion of revenue exceeded Wall Street's estimates by 1.3%. Looking ahead, sell-side analysts expect revenue to grow 8.1% over the next 12 months, a slight deceleration versus the last two years. Despite the slowdown, this projection is noteworthy and suggests the market is forecasting success for its products and services. Unless you've been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) stock benefiting from the rise of AI. Click here to access our free report one of our favorites growth stories. Operating Margin ResMed has been an efficient company over the last five years. It was one of the more profitable businesses in the healthcare sector, boasting an average operating margin of 29%. Analyzing the trend in its profitability, ResMed's operating margin rose by 4.5 percentage points over the last five years, as its sales growth gave it operating leverage. This performance was mostly driven by its recent improvements as the company's margin has increased by 5.9 percentage points on a two-year basis. These data points are very encouraging and shows momentum is on its side. This quarter, ResMed generated an operating margin profit margin of 33.7%, up 2.6 percentage points year on year. This increase was a welcome development and shows it was more efficient. Earnings Per Share Revenue trends explain a company's historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions. ResMed's EPS grew at a spectacular 14.9% compounded annual growth rate over the last five years, higher than its 11.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded. We can take a deeper look into ResMed's earnings to better understand the drivers of its performance. As we mentioned earlier, ResMed's operating margin expanded by 4.5 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don't tell us as much about a company's fundamentals. In Q2, ResMed reported adjusted EPS at $2.55, up from $2.08 in the same quarter last year. This print beat analysts' estimates by 3%. Over the next 12 months, Wall Street expects ResMed's full-year EPS of $9.55 to grow 8.6%. Key Takeaways from ResMed's Q2 Results It was good to see ResMed narrowly top analysts' revenue expectations this quarter. We were also happy its constant currency revenue narrowly outperformed Wall Street's estimates. Overall, this print had some key positives. The stock remained flat at $270.94 immediately following the results. So do we think ResMed is an attractive buy at the current price? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it's free. 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