Earnings Week Round-Up: Six Results & What They Tell Us

It's been one of the biggest earnings weeks of the year, with results from across the globe painting a vivid picture of where the money is flowing, and where it isn't.

Wednesday and Thursday brought a flood of results. Here's what stood out, and what it means for you as a long-term investor.

Microsoft vs Meta: The AI Trade Splits in Two

The starkest contrast of the week came from two of the world's biggest tech companies. They reported on the same day, but moved in opposite directions.

Microsoft jumped 8% after reporting 43% growth at its Azure cloud business, ahead of expectations. Its AI work assistant, Microsoft 365 Copilot, now has over 30 million paid users, up from 20 million in April.

After years of questions about whether enormous AI spending would ever translate into revenue, Microsoft gave investors a clear answer: yes, it's starting to.

Meta fell nearly 9% despite reporting revenue growth, because its forward guidance disappointed and its free cash flow collapsed 91% year-on-year to just $784 million.

The company is spending at an enormous rate on AI infrastructure and hasn't yet given investors a convincing story about what comes back in return. Zuckerberg suggested Meta might start leasing excess computing capacity to third parties, but offered few details. Markets were unimpressed.

The divergence matters beyond these two companies. It signals that investors are no longer treating all AI spending equally - they want to see evidence that the money going in is producing returns coming out. Microsoft provided that evidence, but Meta hasn't yet.

Shell: War Is Good for Energy Profits

Shell posted its best quarterly result in four years, with adjusted earnings of $9.84 billion for the second quarter, comfortably beating analyst expectations. The last time Shell did this well was in 2022, when Russia's invasion of Ukraine sent oil and gas prices surging.

The parallel to now is not coincidental - the Iran war has pushed energy prices sharply higher, and Shell is a direct beneficiary.

CEO Wael Sawan described volatility as "the new normal" and said Shell has been building a business designed to thrive through it. For investors in energy stocks or broad global equity funds, Shell's results are a reminder that not all sectors suffer during geopolitical instability.

Samsung: Record Profits, but Supply Constraints Until 2028

Samsung posted a record quarterly operating profit, up an extraordinary 1,814% year-on-year, driven almost entirely by AI-driven demand for memory chips, while revenue rose 130%. The numbers are remarkable, but come with an important caveat.

Samsung said it expects supply constraints in the memory chip market to persist through 2027 and potentially tighten further, important context for the broader chip selloff we've been covering this week.

Even as Samsung reports record profits, the underlying dynamics, surging demand, constrained supply, and massive new investment in production capacity are creating uncertainty about where prices go from here.

The company has finalised supply agreements with five of the world's top data centre customers and is in final talks with five more, giving it clearer visibility into future demand than it's had before.

Rolls-Royce: Riding Two Mega-Trends at Once

Rolls-Royce, the British engineering group rather than the car brand, had a standout week. It raised its full-year profit guidance significantly, now expecting underlying operating profit of £4.7 to £4.9 billion, up from a previous forecast of £4 to £4.2 billion. Shares rose around 6%.

What makes Rolls-Royce interesting is where the growth is coming from - it's benefiting from two of the biggest investment themes in markets right now simultaneously.

First, defence spending. European rearmament is generating long-term contracts, creating higher demand for military engines and systems.

Second, data centres. Orders in Rolls-Royce's power systems division, which supplies backup and on-site power to data centre operators, grew more than 50% in the first half of the year. Data centres facing grid constraints and needing reliable backup power are turning to Rolls-Royce's power systems division. Orders in that business grew more than 50% in the first half of the year.

Stellantis: Turning Around, Slowly

Stellantis, the company behind Jeep, Dodge, Fiat, and Peugeot, swung from a loss to a profit in the second quarter. Net profit came in at €293 million, compared to a loss of nearly €1.9 billion a year earlier. That sounds like a big improvement, and it is, but the stock still fell 5% on the day.

The reason is that while the direction is right, adjusted operating income, which strips out one-off items to show the underlying profit from the business, came in below analyst estimates and the margin remains very thin at 1.8%. I've linked a Daily Deep Dive article that breaks down earnings terms like this in the Resources below.

Stellantis' North American business is recovering, and free cash flow came in better than expected, but the turnaround under CEO Antonio Filosa is still in its early stages and investors want more evidence before returning in force.

What This Week's Earnings Tell Us

Taken together, this week's earnings tell a consistent story. Companies directly in the path of defence spending, energy prices, and AI infrastructure are doing well - though the recent sell-off in semiconductor stocks shows how quickly sentiment can shift. Companies in competitive, capital-intensive industries like autos face a long road back. And in Big Tech, the market is becoming increasingly impatient with AI spending that hasn't yet translated into visible returns.

For long-term investors, the growing differentiation within the AI trade is an interesting development. The first phase was about buying anything connected to AI. The second phase, which this week's earnings suggest we're now in, is about working out which companies are actually making money from it.

Microsoft is clearly in that category. Meta is still making its case.