Mega tech came out with all earnings guns blazing as Microsoft and Google parent Alphabet kicked-off the closely watched quarterly reporting season for the world’s biggest and best-known technology companies.
Alphabet reported better-than-anticipated quarterly sales after an increase in digital ad spending by businesses looking to expand during the pandemic reopening. Microsoft's revenue jumped too, amid firm demand for cloud services and the strongest gain in personal computer shipments in more than two decades.
EARNINGS DRIVEN
‘Big tech largely delivered,’ said Markets.com analyst Neil Wilson, flagging a massive earnings beat by Alphabet as YouTube ad revenues rose 50% year-on-year. Total earnings for the company were up 34% to $55.3 billion versus $51.7 billion expected while earnings per share hit a lofty $26.29 vs $15.82 expected. Cloud revenues were up 46%.
Alphabet stock jumped more than 5% to $2,427.30 in after-market trading, kicked on by board authorisation to launch a huge share buyback worth up to $50 billion of stock.
Microsoft also reported earnings and sales that beat analyst expectations, driven by growth in cloud demand, although the stock failed to get its own rally off the ground. Microsoft shares slipped around 2% on after-hours trading to $256.26, albeit from an all-time high $261.97.
Third quarter to 31 March 2021 saw revenues up 19% to $41.7 billion and operating profit up 31% to $17 billion, compared against market expectations of $40.8 billion and $15.9 billion respectively.
TECH ALL-ROUNDER
‘Microsoft’s results continue to show that it really does have all bases covered when you look across its divisions,’ said Megabuyte analyst Lee Prout.
‘The leading driver is clearly the Cloud and ultimately Azure but it is also benefitting from the shift to Cloud-based ERP and CRM solutions in Dynamics 365,’ Prout said, referring to enterprise resource planning and customer relationship management toolkits. Interestingly, there is also exposure to greater digital advertising, also echoed in Alphabet results, through LinkedIn and search advertising, not something Microsoft is well known for.
‘To top it off, the launch of a new Xbox console comes at the perfect time with most people still stuck at home and even its traditional Windows OEM business can’t do any wrong driven by continued pandemic demand for new equipment as businesses adapt to remote and hybrid working environments,’ said Prout.
Apple and Facebook report after the US market close, at 9pm UK time on 28 April. Amazon, the last to the big five to report, announces after-hours on 29 April 2021.
