Weekly Earnings
Microsoft (MSFT) reports after the close on Tuesday, Oct. 24.
Microsoft should earn $2.52 per share on $51.72 billion in revenue, according to Wall Street. Same period last year, earnings were $2.35 per share on $49.61 billion in revenue.
What to watch: Microsoft shares fell 15% since reaching an all-time high of $366 in mid-July. At $326, the stock is up 36% year to date, outperforming the S&P 500 index by 10%. Even after three months of about 10% drop. The software and cloud giant’s multi-year, multi-billion dollar investment in ChatGPT creator OpenAI has made it a hot investor option. Microsoft had stated that AI would drive its growth.
At Goldman Sachs’ Communacopia + Technology conference in September, Microsoft CFO Amy Hood claimed Generative AI “absolutely should be the fastest $10 billion business we’ve ever built.” Citigroup analysts concur ahead of the tech giant’s quarterly earnings next week. The analysts predict Microsoft to achieve “accelerating” overall revenue and profitability due to IT budget stabilization and generative AI revenue growth. Microsoft’s Azure cloud platform and Microsoft 365 Copilot, which costs $30 per month for Microsoft 365 customers on different plans, are also expected growth tailwinds. Some analysts estimate that Copilot could boost Microsoft’s fiscal 2025 revenue by $9 billion. Microsoft stock is worth owning in 2023 and beyond. The company’s guidance will reveal management’s growth optimism on Tuesday.
These activities boost the company’s short-term finances and long-term profitability as cost efficiency increase. Revenue climbed 11% and adjusted EPS rose from $2.46 to $2.98 in the latest quarter. The quarter saw gross margin stay above 81% and operating margin rise from 29% to roughly 32%, boosting cash flow from operations by almost 50%. Despite macroeconomic obstacles, these fundamental changes are vital to the bottom line. With an estimated 3 billion monthly active users on its family of products, Meta has begun to build its main digital advertising business. On Wednesday, the firm must continue to enhance these areas while maintaining its large tech leadership for the quarter and year.
Meta Platforms (META): Post-close report, Wednesday, Oct. 25
Wall Street predicts $31.85 billion in revenue and $3.45 per share from Facebook. Last quarter, earnings were $1.64 per share on $27.71 billion in revenue.
What to watch: Meta stock has held up well among mega-cap performers despite the tech stock downturn. Its shares have climbed almost 40% in the past six months, outpacing the S&P 500’s 2% rise. META stock has risen 1.5% in the past month, compared to the S&P 500 index’s 10% gain. Given the stock’s good trend, investors want to know how much better things can get. Their management has taken the proper steps, including cost optimization, to cut Meta’s 2023 spending projection twice this year.
These bottom line growth were fueled by high-margin advertising revenue and larger unit sales, which distributed fixed expenses across more revenue. But there was bad news. Despite revenue growth, AWS profitability fell from $5.72 billion to $5.37 billion. Management said this was due to voluntary spending for long-term growth. Amazon now has a lower cost profile, which will boost earnings in the coming quarters. Despite being more expensive than at the start of the year, Amazon stock remains a bargain compared to the company’s long-term potential. Investors will expect robust profit forecasts on Thursday to back the long-term return investment thesis beyond a top- and bottom-line beat.
Amazon (AMZN): Post-close reports, Thursday, Oct. 26
Wall Street forecasts 55 cents per share on $134.21 billion in Amazon revenue. Last year, earnings were 28 cents per share on $127.1 billion in revenue.
What to watch: Amazon stock remains a mega-cap top performer, rising 52% year to date, outperforming the S&P 500 index’s 11% increase. This despite a 7% drop last month. Growth and efficiency strategies have paid off for the e-commerce giant. In the latest quarter, Amazon’s cost-cutting efforts paid off as profits rose across all divisions except AWS, which fell due to growing costs. The company increased revenue, earnings, operating cash flow, EBITDA, and net profits in Q2. North America reversed a $627 million loss in the second quarter of 2022 to a $3.21 billion gain.
These bottom line growth were fueled by high-margin advertising revenue and larger unit sales, which distributed fixed expenses across more revenue. But there was bad news. Despite revenue growth, AWS profitability fell from $5.72 billion to $5.37 billion. Management said this was due to voluntary spending for long-term growth. Amazon now has a lower cost profile, which will boost earnings in the coming quarters. Despite being more expensive than at the start of the year, Amazon stock remains a bargain compared to the company’s long-term potential. Investors will expect robust profit forecasts on Thursday to back the long-term return investment thesis beyond a top- and bottom-line beat.
Intel (INTC): Post-close report, Thursday, Oct. 26
Intel should earn 20 cents per share on $12.82 billion in revenue, according to Wall Street. The year-ago quarter earned 59 cents per share on $15.25 billion in revenue.
What to watch: Intel shares have held up nicely in 2023 despite the market drop. Intel’s stock has risen 35% year to date, compared to the S&P 500’s 11.4% gain. The market appears to be rewarding Intel for its fundamental gains. To accelerate turnaround, management has divested non-core businesses and spun out Mobileye automotive shares. Additionally, Intel has begun to profit on the huge AI semiconductor industry.
Intel’s wide business portfolio, which serves many industries, will help it lead AI. The organization has shown it has the financial strength to compete for expansion prospects. Intel is benefiting from a minor resurgence in the personal computer market, which had plummeted owing to pandemic interruptions. Intel’s foundry business grew in the latest quarter, especially from “advanced packaging,” which allows Intel to integrate chip components from other businesses to make more powerful CPUs. Personal computer revenue fell 12% to $6.8 billion. This should boost third-quarter and year-end margins. The chip giant is alive and well. Patient investors who give the company more time to restore leadership can profit. However, the corporation must beat its top and bottom lines again on Thursday while selling its recovery upside.
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