Microsoft and Meta Deliver "Home Run" Q1 Results: Dan Ives’ Bullish Take on AI Dominance

The tech sector is roaring back to life, and microsoft (MSFT) and Meta Platforms (META) are leading the charge. In their Q1 2025 earnings reports, both companies delivered results that exceeded expectations, fueled by aggressive AI investments and cloud dominance. Analyst Dan Ives of Wedbush Securities called them “home run” performances, highlighting their resilience against macroeconomic headwinds and positioning them as cornerstones of the AI revolution.

Microsoft’s Azure Momentum and AI Monetization

Microsoft’s Q1 results were a masterclass in execution. Revenue hit $65.6 billion, with Azure’s cloud division surging 33% year-over-year in constant currency. A staggering 16% of Azure’s growth stemmed directly from AI adoption, proving that its AI-first strategy is paying dividends. CEO Satya Nadella emphasized, “Cloud and AI are essential inputs for every business to expand output, reduce costs, and accelerate growth.”

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The company’s cost discipline stood out: expenses rose just 3% year-over-year, even as its workforce grew to 230,000. Microsoft also reaffirmed its $80 billion 2025 capital expenditure (CapEx) guidance, signaling a full-throttle push into AI infrastructure.

Dan Ives raised his price target for MSFT to $515 (from $475), calling it a “Buy” and noting that Azure’s performance had exceeded even bullish expectations. He highlighted that Microsoft’s ecosystem advantages—spanning Azure, Windows, and Copilot—give it a structural edge over rivals.

Meta’s CapEx Surge and AI Ambitions

Meta Platforms’ Q1 results were equally impressive, with revenue up 13.1% to $42.3 billion, driven by strong ad sales and AI-driven services like its Llama API. But the real headline was its $64–72 billion CapEx guidance, a $2–7 billion increase from earlier projections. CFO Susan Li framed this as critical to building an “advantage in the quality and scale of AI services”, countering competition from Chinese startups like DeepSeek.

Despite concerns about tariffs and geopolitical risks, Ives argued that Meta’s investments were a “strong sign of confidence in the AI revolution.” He raised his price target to $690 (from $595), citing its $16.6 billion net income and the launch of standalone Llama apps as proof of execution.

Analyst Takeaways: Why Both Stocks Are Winning the AI Race

Dan Ives’ analysis emphasized three key themes:
1. AI is the Growth Engine: Both companies’ Q1 results underscored that AI adoption isn’t slowing—it’s accelerating. Azure’s 16% AI-driven growth and Meta’s Llama ecosystem are proof.
2. Infrastructure Spending Isn’t Slowing: Microsoft and Meta’s combined $144–152 billion CapEx guidance reflects a sector-wide “gold standard” for AI investment, defying macro concerns.
3. Tariffs Won’t Stop the Tech Resurgence: While tariffs caused initial volatility (Nasdaq fell 15% in April), both companies’ results helped the index rebound 20% by Q1’s end.

Conclusion: Buying the AI Future at a Discount

Microsoft and Meta’s Q1 results mark a pivotal moment. Azure’s 33% growth and Meta’s $64–72 billion CapEx surge validate their AI strategies, while their stock prices remain undervalued relative to their long-term potential.

• Microsoft’s valuation: At $515, the stock trades at 33x 2025 earnings, but its AI-driven revenue streams could justify a $550 price target (as Ives later noted).
• Meta’s upside: At $690, it’s 16% below its potential, with AI services unlocking new revenue streams.

With $80 billion in combined CapEx and AI adoption rates hitting record highs, these stocks are positioned to capitalize on the $300 billion AI infrastructure market by 2030. As Ives put it: “The AI revolution isn’t slowing—it’s just starting, and these companies are leading the charge.”

For investors, the choice is clear: Microsoft and Meta are the best seats in the house for the AI era.