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Earnings
Earnings Watch: Microsoft’s Strong Growth Anticipated, Alphabet’s AI and Ad Market in Focus
Tuesday marks one of the bigger days of the current earnings season, with both Microsoft and Alphabet set to release their latest quarterly results.
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Tech behemoths and two of the “Magnificient Seven,” Microsoft (NASDAQ: MSFT) and Alphabet (NASDAQ: GOOG), are poised to report their latest quarterly results following the market close on Tuesday. Investors and analysts will closely scrutinize these reports for insights into recent AI and online advertising market trends.
Microsoft Expected to Reinforce its Pole Position
The world’s largest company by market cap is set to unveil its financial results for fiscal Q2 2024, and much of Wall Street is expecting it to expand its momentum in 2023.
Notably, Microsoft is anticipated to report a 15.8% surge in quarterly revenue, which would mark its best growth in almost two years. In other words, analysts believe that with today’s upcoming report, the Windows maker will likely impress investors again as the rising adoption of its GenAI-equipped products continues to drive demand for cloud services.
“Gen AI has emerged as the top priority for (chief information officers) and Microsoft is uniquely well positioned, with the majority of CIOs expecting to use a Microsoft AI product in the next 12 months.”
– said Morgan Stanley analyst Keith Weiss in a recent note.
Wall Street predicts Microsoft’s revenue will rise to $61.14 billion from last year’s $52.75 billion, growth that should bolster the company’s net income. Analysts project Microsoft’s earnings per share (EPS) to climb to $2.77 in Q2, compared to the previous year’s adjusted EPS of $2.32.
The company’s net income jumped 27% year-over-year in Q1, while revenue grew almost 13% to $50.12 billion.
Wall Street’s Estimates for Google’s Q4 Report
While beating expectations for the top and bottom line, Alphabet’s previous quarterly report for fiscal Q3 2023 initially triggered a negative investor response due to its Google Cloud segment’s revenue growth falling short of forecasts.
Like Microsoft, Google’s owner is also set to unveil its latest quarterly performance after the market close. Wall Street analysts expect the technology heavyweight to report EPS of $1.60 for the fiscal Q4 on revenue of $85.28 billion. That would represent a significant year-over-year jump when the company posted EPS of $1.05 on revenue of $76 billion.
Further, investors will be eager to learn more about Gemini, the company’s latest generative AI effort, and also monitor updates on the advertising market’s current condition and stability.
In the third quarter, Alphabet’s revenue surged 11% year-over-year, marking the first return to double-digit growth over a year.
Do you think both Microsoft and Google will beat consensus estimates today? Let us know in the comments below.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
