You were reminded of an important investing lesson this week.
But I can’t fault you if you missed it, even if it was right under your nose.
Meta (META) being coy about future AI spending isn’t what the market wants to hear as overspending fears rattle tech stocks.
Yet that’s what the market got — and Meta received another earnings day stock plunge in return. The move is likely to keep dark clouds over the stock through the summer.
“We aren’t providing a specific outlook for 2027 capex at this time,” Meta CFO Susan Li told analysts on a late-Wednesday earnings call.
That lack of specifics isn’t going to cut it in this market.
And what is this market, you ask? It’s one where tech companies are seeing valuation destruction because of their runaway spending. It’s a market where investors start their day blown away by the swift sell-off in the Kospi index. It’s a market that is beginning to be rattled by the Federal Reserve and its new chair.
It’s also a market — and here is the lesson — that rewards very large companies for finding a new gear. Companies with massive scale and leadership focused on driving shareholder value. Companies that have nothing to do with compute power, data centers, and AI agents.
Two examples: Starbucks (SBUX) and Coca-Cola (KO).
Starbucks took another step this quarter to prove that the focus on restaurant basics and afternoon hours is gaining traction.
Global comparable-store sales rose 7.9%, well ahead of Wall Street expectations, marking the company’s fourth consecutive quarter of same-store sales growth under CEO Brian Niccol’s turnaround plan.
Adjusted earnings came in at $0.85 a share, easily topping analysts’ forecasts of $0.66.
The company also expanded its operating margin to 14.4% from 10.1% as cost-cutting efforts and improved store operations boosted profitability.
Starbucks signaled with its raised full-year guidance that it sees the momentum carrying over into its fourth fiscal quarter.
“I think they’re [the results] very durable. The reason why is because the consistency really is scaling across our business. And, at the end of the day, I think what we’re doing is just being Starbucks,” Niccol told me on Opening Bid.
Starbucks stock is closing in on its July 2021 record highs, per Yahoo Finance AlphaSpace data.
The vibe was similar at Coca-Cola.
Coke’s net sales climbed 7% year over year to $13.4 billion, while comparable earnings per share jumped 11% to $0.97. Organic growth was fueled by a 5% surge in global unit case volume. Volume for its trademark Coca-Cola brand also jumped 5%, while Powerade increased 8%.
