Good morning, investors. The Fed surprised no one as it kept interest rates unchanged Wednesday, though two policymakers dissented against Jerome Powell in favor of a rate cut.

In today’s edition we’re turning to Big Tech — and the blowout earnings that outshined monetary policy.

Meta the magnificent

Mark Zuckerberg is diverting more and more of Meta’s unlimited budget into AI and Wall Street just keeps applauding.

After trading closed Wednesday, the Facebook parent company reported blowout earnings that sent its stock 12% higher after hours:

• Revenue: $47.52 billion, above $44.83 billion expected

• Earnings per share: $7.14, above $5.92 expected

• Ad revenue: $46.56 billion, above $43.97 billion expected

• Net income: $18.34 billion, up 36% year-over-year

Meta also slightly raised its capex guidance by $2 billion, and now expects to spend between $66 billion and $72 billion for the year.

Meta’s AI-fueled ad engine — bolstered by improved targeting and conversion rates — helped fuel the business and share prices over the last quarter.

Meanwhile, its novel smart glasses tripled sales compared to a year ago.

All of the above has helped Meta outperform most of its AI peers the last year with a 50% rally.

Notably, Meta CFO Susan Li addressed the company’s recent AI hiring spree, nodding to its hefty compensation packages for top talent.

"Aside from infrastructure, we expect the second-largest driver of growth to be employee compensation as we add technical talent in priority areas and recognize a full year of compensation expenses for employees hired throughout 2025,” Li said in a statement.

“We expect these factors will result in a 2026 year-over-year expense growth rate that is above the 2025 expense growth rate."

Investors, for their part, are now treating Meta’s massive spending as a calculated play, rather than a hype-driven gamble.

Zuckerberg’s $14.3 billion stake in Scale AI as well as his willingness to throw cash at new hires underscores Meta’s interest in dominating the AI race.

Those ambitions have coincided with actual revenue momentum, making it easier for Wall Street to buy into the vision and harder for analysts to question big spending plans.

I highly recommend reading Mark Zuckerberg’s new blog post on AI, which he published Wednesday.

Market snapshot

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Elsewhere

📈Microsoft stock also surged after hours. Meta’s Big Tech peer also reported strong earnings that fueled its share price. Microsoft is on track to join the $4 trillion market cap club, as it posted adjusted earnings of $3.65 a share on revenue of $76.4 billion, beating on both figures. (Barron’s)

📊 The Fed kept rates steady, as expected. The two dissenting votes underscore the fraying consensus among policymakers. Powell and his colleagues are beginning to diverge on how they believe tariffs will impact the economy. (WSJ)

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Rapid-fire

• Samsung missed profit expectations and its chip businesses tanked in the last quarter (CNBC)

• GDP numbers blew away expectations for 2.4%, coming in at 3.0% and dashing forecasts of the bears (Pomp Letter)

• US and South Korea reached a trade deal with tariffs on Seoul set at 15% (CNBC)

• Qualcomm beat earnings estimates but the stock still dropped (Barron’s)

• Elon Musk’s Boring Company plans to dig 10 miles of underground tunnels in Nashville (CNBC)

• Arm reported solid earnings but it wasn’t enough to please investors (Barron’s)

• China’s manufacturing activity contracted more than expected and declined for the fourth month in a row (CNBC)

Last thing

About me

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at [email protected].

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