- Google-owner Alphabet stock jumps 6.5% overnight
- Microsoft softer as it tries to calm investor over-exuberance
- Typically strong showing from payments play Visa
The starting gun was fired on the latest round of big tech earnings as Microsoft (MSFT:NASDAQ) and Alphabet (GOOG:NASDAQ) reported after-hours.
This year’s rally in US stocks has been largely driven by tech behemoths, carrying both the S&P 500 and the recently re-weighted Nasdaq 100 higher, the former setting a fresh 15-month high.
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Microsoft and Alphabet shares are up approximately 51% and 29% since Shares told investors to buy both stocks towards the end of 2022, after months of technology stock declines.
Microsoft and Alphabet earnings carry huge implications for artificial intelligence, cloud computing and the tech sector broadly, so investors had their eyes fixed on the figures and guidance.
MICROSOFT EARNINGS BEAT
Microsoft earnings topped fiscal fourth quarter (Q4) forecasts, with revenue up 8% to $56.19 billion, slowly accelerating for a second straight quarter. Azure cloud computing growth rose 26% versus a year earlier, edging past views though below the prior quarter’s 27% advance.
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On the conference call, Microsoft said Intelligent Cloud revenue, which includes Azure, will fall slightly sequentially in Q1 2024. The S&P 500 tech titan, which last week announced AI pricing for enterprise customers, said AI revenue growth will be ‘gradual’, reeling in investor expectations.
Microsoft also said it expects ‘increased capital spending on AI initiatives,’ with capex rising sequentially in each quarter of fiscal 2024.
Capping potential over-exuberance, Microsoft stock lost nearly 4% in extended trading, mostly on the earnings call commentary.
Chip designs firm Nvidia (NVDA:NASDAQ), rose fractionally overnight, as Microsoft’s AI spending spree will likely mean more Nvidia chip sales.
GOOGLE-OWNER ALPHABET JUMPS
Alphabet earnings climbed 19%, ending a four-quarter string of year-on-year declines, on revenue 7% higher, the second straight quarter of slightly faster growth. The internet search king said cloud computing revenue rose 28% to $8.03 billion.
Cloud computing, not artificial intelligence, is what’s really driving big tech earnings
On the earnings call, Alphabet executives remained bullish about incorporating AI features with advertising, sparking a near 6.5% jump $122.79 overnight.
Global payments powerhouse Visa (V:NYSE) drifted modestly despite a narrow beat on quarterly earnings and revenue.
