Microsoft shares fell 7% in extended trading on Tuesday as investors looked past better-than-expected earnings and revenue and focused instead on disappointing cloud results.
Here’s how the company did, compared with the LSEG consensus: -> Earnings per share: $2.95 vs. $2.93 expected -> Revenue: $64.73 billion vs. $64.39 billion expected Microsoft’s revenue increased 15% year over year in the fiscal fourth quarter, which ended on June 30, according to a statement. Net income, at $22.04 billion, was up from $20.08 billion, or $2.69 per share, in the year-ago quarter. The company’s top segment, Intelligent Cloud, generated $28.52 billion in revenue. It includes the Azure public cloud, Windows Server, Nuance and GitHub. The total was up about 19% and below the $28.68 billion consensus among analysts surveyed by StreetAccount. GitHub’s revenue is now at an annual run rate exceeding $2 billion, Microsoft CEO Satya Nadella said on a conference call with analysts. Revenue from Azure and other cloud services grew 29% during the quarter. Analysts polled by CNBC and StreetAccount had expected 31% growth. Microsoft’s Azure number hadn’t fallen short of consensus since 2022. Microsoft doesn’t disclose revenue from the category in dollars. In a nutshell: $MSFT Microsoft Q4 FY24 (ending in June): ☁️ Azure +30% Y/Y fx neutral (vs. 31% in Q3). • Revenue +15% Y/Y to $64.7B ($0.3B beat). • Gross margin 70% (-1pp Y/Y) • Operating margin 43% (flat Y/Y). • EPS $2.95 ($0.02 beat). Source: CNBC, App Economy Insights
A critical week ahead for the Nasdaq 100 QQQ which is sitting at critical trendline support at the time of FOMC meeting + $AAPL $MSFT $AMZN $META earnings...
Source; Trend Spider
Alphabet slipped 1% after-hours in spite of a beat on both top and bottom lines in the second quarter.
Alphabet earned $1.89 per share on $84.74 billion in revenue. Consensus estimates had called for earnings of $1.84 per share on $84.19 billion in revenue. However, revenue at its Youtube advertising segment missed forecasts. $GOOG Alphabet Q2 FY24 by App Economy Insights: • Revenue +14% Y/Y to $84.7B ($0.5B beat). • Operating margin 32% (+3pp Y/Y). • EPS $1.89 ($0.04 beat). ☁️ Google Cloud: • Revenue +29% Y/Y to $10.3B. • Operating margin 11% (+6pp Y/Y). ▶️ YouTube ads +13% to $8.7B.
Tech’s outperformance has been highly correlated to its earnings vs. S&P 500 since the Tech Bubble
Source: BofA, Mike Z.
Equal weight S&P 500 (ETF $RSP) is considerably cheaper than the market cap weighted ETF, just as we may see earnings growth broaden out to a wider swath of companies.
Does that spell opportunity? Source: Markets & Mayhem, GS
Netflix, $NFLX, officially kicks off big tech earnings season with a MASSIVE swing in price.
The stock just swung over 10% in a matter of minutes after reporting results. The company reported Q2 2024 EPS of $4.88, above expectations of $4.76. They also added 8.05 million subscribers, crushing expectations of 4.5 million. Big tech earnings season has officially begun. Source: The Kobeissi Letter
There are 2 ways to look at this chart:
1/ Mag7 outperformance is justified by positive earnings revision (vs. negative revision for the rest); 2/ The bar has been raised quite high for the Mag7 (so beware if they disappoint) while the bar is low for the other 493 stocks (there is room for positive surprise) Source: Bloomberg, RBC
2025 and 2026 look much better for US small caps earnings, relative to large caps
Source: JPM, RBC
