What’s going on here?

Microsoft revealed its latest results late on Tuesday, but the cloud’s silver lining had lost its sparkle this time around.

What does this mean?

Microsoft set the bar high for Big Tech’s AI endeavors. A partnership with ChatGPT’s creator OpenAI, the launch of AI-powered PCs, and super-smart cloud offerings have convinced investors that the firm is the one to watch. But after tuning into results day with high expectations, they were likely left feeling flat. Sure, Microsoft’s revenue rose by a slightly better-than-expected 15% last quarter from the same period last year, continuing its estimate-beating streak for the sixth straight quarter. But sales growth at its all-important cloud business, Azure, slowed by more than forecast, which was enough for investors to initially send Microsoft’s shares lower after the news.

Why should I care?

For markets: Big Tech’s big risk.

Even the biggest names in tech were exploring their thriftier sides after the pandemic. But they soon tossed their cost-cutting plans aside, funneling loads of money into data centers instead. The massive warehouses are filled with computer gear, and they’re essential for training and deploying AI models. Thing is, like many physical investments, data centers lose their value over time, and that depreciation will show up in their bottom lines – unless Big Tech can match the cost with revenue, of course.

The bigger picture: It’s instant chatbot conversations or the planet.

Data centers guzzle up tons of power, so much so that clean energy is struggling to keep up. Of course, companies aren’t going to slow down for the sake of the Earth, so they’ll still be reliant on dirtier fuel for some time. That’s starting to push some climate goals further out to sea. The US, for example, is likely to only cut greenhouse gas emissions by 32% to 43% by 2030, relative to 2005 levels – well short of its 50% target.

What’s going on here?

European economies moved in different directions last quarter, and even a summer of Aperol Spritz and free olives won’t be enough to cure the European Central Bank’s (ECB) headache.

What does this mean?

France and Spain’s economies picked up by a better-than-expected 0.3% and 0.8% respectively last quarter, despite business-bruising interest rates still sitting high across Europe. Nipping at their heels, Italy wrangled a 0.2% uptick, slightly lower than last quarter’s figure. But Germany, the region’s workforce, stumbled with a 0.1% drop. So despite much of Europe making headway, there’s no guarantee that’ll be enough to convince the ECB to trim rates again – especially as France’s data only partly reflects the outcome of the recent election, which could bring about higher costs, taxes, and uncertainty.

Why should I care?

Zooming out: Many horses, one course.

The ECB has a particularly tricky job: each country in the region has a separate economy and circumstance, but the central bank still needs to find a one-size-fits-all interest rate policy. That’s why the central bank stressed that June’s slight trim won’t necessarily be followed by another cut in September, even though traders have priced in a 90% chance of one. The region’s weaker economies may need lower rates to spur on businesses and spending, see, but the strongest ones could use higher-for-longer rates to control inflation.

The bigger picture: What goes up might come down.

Many of Europe’s biggest companies are slashing their profit targets, issuing more warnings this quarter than in any of the last four. Plus, China’s hard-pressed shoppers have pulled back, hitting firms in the luxury goods, consumer staples, and vehicle industries. For now, stock analysts still hope the Stoxx Europe 600 index will see 4% more profit this year than last. But with more analysts cutting earnings forecasts than raising them, once-optimistic investors could head for the door.