Today’s trading session offers a textbook case of mixed signals. The recent GDP report came in stronger than expected, and despite the President’s aggressive tariff and trade policy, the U.S. has managed to avoid a recession. Yet, the Federal Reserve held interest rates steady at this month’s policy meeting, while early indicators point to a rise in inflation. Both of the latter suggest that consumer spending – the true engine of the U.S. economy – may come under renewed pressure.
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Meanwhile, Big Tech is telling a different story. Earnings from several members of the so-called ‘Magnificent 7′ indicate that doubling down on AI wasn’t just hype – it was a calculated, strategic move that’s now paying off.
Goldman Sachs is taking note. The firm’s analysts are recommending both Microsoft (NASDAQ:MSFT) and Meta Platforms (NASDAQ:META) as Mag 7 stocks to buy after the earnings releases. At the same time, the TipRanks database shows that both names carry Strong Buy consensus ratings from the Street. Let’s take a closer look.
Microsoft
We’ll start with Microsoft, currently the second largest company on Wall Street, with a valuation of just under $4 trillion. While best known for its legacy in PC software, Microsoft has evolved into a major player in two of the most transformative areas in tech: AI and cloud computing.
That evolution gained serious momentum in late 2022 when Microsoft backed OpenAI, the startup behind ChatGPT. With approximately $13 billion funneled into the partnership, the company didn’t just support the generative AI boom – it helped launch it.
Microsoft’s operating systems and office software may have built the company’s foundation, but the company is betting its future on its work with AI and its Azure cloud platform. On the AI front, Microsoft is using the tech in a variety of ways: the company has integrated AI tools into its customer contact apparatus, in the form of automated chatbots, call center coordination, and contact data management. The company has also built AI into the recent releases of its Windows and Office packages, in the form of the Copilot online assistant.
Another excellent investment on Microsoft’s part was the development of Azure, its subscription-based cloud computing platform. Since its launch in 2010, Azure has become one of the leading cloud computing services, alongside AWS and Google Cloud. Azure is popular as a cloud platform, and Microsoft has enhanced it with AI-powered tools and apps, in a move that shows that, for Microsoft, software, AI, and the cloud are all related, and work together to form a larger whole.
With all of that in the background, we can look at Microsoft’s quarterly report for fiscal 4Q25. The numbers show that Microsoft brought in quarterly revenues of $76.4 billion, up 18% year-over-year and beating the forecast by $2.6 billion. At the bottom line, the company saw a GAAP EPS of $3.65. This figure was up 24% year-over-year, and came in 27 cents per share better than had been anticipated. Revenue for the company’s Intelligent Cloud, which includes Azure, was reported as $29.9 billion, for a 26% year-over-year gain. For the full fiscal year 2025, Microsoft’s total revenue came to $281.7 billion. This figure represented a year-over-year gain of 15%, and included more than $75 billion in revenues attributable to the Azure platform. Azure’s full-year revenue was up 34% from fiscal year 2024.
For Goldman analyst Kash Rangan, the key point to understanding Microsoft’s prospects is the company’s strong position in AI. The 5-star analyst says of the software giant: “We leave with increasing confidence in the longevity of AI-supported growth supporting share capture across Microsoft’s businesses. This quarter helped validate our thesis that AI percolates up the stack, the ripple effect of Microsoft’s GPU compute leadership drives demand for their wider suite of higher-margin products which, uniquely, cover all layers of the tech stack. We believe that in an agentic world, as AI workloads rapidly scale, Microsoft will see benefits across its business, with demand for more storage, more databases, and more application usage (as well as upside from OpenAI revenue sharing).”
To this end, Rangan puts a Buy rating on Microsoft shares, and complements it with a $630 price target that suggests a one-year gain for the stock of 18%. (To watch Rangan’s track record, click here)
Like most of the Magnificent 7 mega-cap stocks, Microsoft has attracted plenty of attention from the Street’s analysts. The stock has 35 recent analyst reviews on record, including 33 Buys and Holds, to support its Strong Buy consensus rating. The shares are priced at $533.50, and their $612.84 average price target points to a ~15% upside in the coming year. (See MSFT stock forecast)
Meta Platforms
Next up is Meta, the parent company of Facebook, Instagram, Messenger, and WhatsApp – and arguably the world’s leading social media company. Meta’s family of social apps saw a 6% year-over-year increase in daily active people, or DAP, to 3.48 billion in June of this year. This is consistent with previous reports – the DAP in March of this year came to 3.43 billion, also a 6% year-over-year gain, and in December 2024, the DAP of 3.35 billion represented a 5% year-over-year increase. Meta’s DAP represents approximately 41% of the global population.
That’s a solid foundation for any social media company, and it reflects both the popularity of the social media model and the particular success inherent in CEO Mark Zuckerberg’s early entrance into the social media race. Building on the strength of its large user base, Meta has also built a strong digital advertising business as its primary revenue-driving operation.
The same quarterly report that showed Meta’s ongoing success in increasing its DAP reach also showed that the company generated nearly $46.6 billion in advertising revenue for 2Q25, for a 21.6% year-over-year jump. The company’s higher revenue was based on increases in its advertising activities; in Q2, Meta delivered an 11% increase in ad impressions across its family of apps, and the average price per ad was up by 9% year-over-year.
Like Microsoft above, Meta’s chief revenue drivers give it the deep pockets needed to invest heavily in AI. The company’s initiative, Meta AI, is designed to provide a multilingual assistant across its social media platforms. The AI is capable of monitoring browsing and search activity to fine-tune ads, and of translating text in real time to smooth out the user experience across platforms. In a useful twist, Meta has built the Meta AI platform on an open-source model, allowing users to contribute to the development of the AI.
Turning to the company’s overall financial results, we find that Meta reported $47.5 billion in total revenue in 2Q25, up 22% year-over-year and beating the forecast by almost $2.7 billion. At the bottom line, Meta’s EPS of $7.14 was $1.28 better than expected.
Covering Meta for Goldman Sachs is 5-star analyst Eric Sheridan, who is upbeat on the stock after the earnings release. Sheridan sees potential for continued strong revenue growth, as well as a sound set-up as a long-term investment.
“We were particularly encouraged by the sustained (& seemingly accelerating) operating momentum that META is showing in its core business, driven by AI. The company’s healthy user/engagement growth and monetization improvements bodes well for sustained DD%+ topline growth for the foreseeable future (despite the company’s scale). On expenses, with recent company announcements and press reports related to the hiring of talent and scaling compute for current and future AI efforts (including the formation of the Meta Superintelligence Lab) raising concern among investors, we felt that META mgmt. effectively framed long-term,” Sheridan opined.
Quantifying his stance, Sheridan puts a Buy rating on META shares, along with an $830 price target. (To watch Sheridan’s track record, click here)
Overall, Meta’s Strong Buy consensus rating is based on 46 recent analyst reviews, with a 43-to-3 split favoring Buys over Holds. The stock is trading at $773.44, and the average target price of $847.49 suggests an upside of 10% over the next 12 months. (See META stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.