Microsoft Stock Earnings: MSFT jumps over 4% afterhours despite missing revenue projections by half a billion

Microsoft Stock Earnings: MSFT jumps over 4% afterhours despite missing revenue projections by half a billion

  • MSFT stock lifted 4% on decent cloud growth in FQ2.
  • Microsoft met EPS consensus but missed revenue forecasts.
  • CEO Satya Nadella focused on the future of AI.
  • XBox, devices and Windows OEM revenues saw major declines.

Microsoft (MSFT)was able to evade the bears late Tuesday when results from its cloud business impressed enough for the market to overlook its half-billion-dollar revenue miss. For the fiscal second quarter, which ended on New Year’s eve, Microsoft reported adjusted earnings per share of $2.32, in line with Wall Street estimates, but revenue of $52.7 billion missed the consensus forecast by $450 million. When you are as large as Microsoft though – the software giant has the second largest market cap in the United States at $1.8 trillion – what is a half billion dollars worth anyway?

Microsoft stock news: Cloud comes to the rescue

Microsoft’s Intelligent Cloud segment that includes Azure lifted revenue by 18% YoY, which allowed shareholders to start breathing again. There had been bountiful worries in the leadup to the results that cloud revenue would see negligible growth. 18% still demonstrates that the growth in cloud has begun to slow, but nearly everyone knew that based on competitors like Amazon Web Services and Google Cloud.

Overall GAAP net income of $16.4 billion fell 12% YoY, but CEO Satya Nadella could not be bothered as he chose to tout the future of Microsoft’s artificial intelligence future. Microsoft just invested billions in a multiyear deal with ChatGPT parent OpenAI.

“The next major wave of computing is being born, as the Microsoft Cloud turns the world’s most advanced AI models into a new computing platform,” said Satya Nadella. “We are committed to helping our customers use our platforms and tools to do more with less today and innovate for the future in the new era of AI.”

The Productivity & Business Processes segment rose 7% YoY. The More Personal Computing segment was the big loser of the operation with revenue declining 19% YoY due to major setbacks in Windows OEM, XBox and devices.

Microsoft stock forecast

Microsoft stock has jumped above $253 afterhours and will likely take aim at $264 in the coming sessions. That price level coincides with the high from December 13. A close on the daily chart above $264 would mean a new higher high had been achieved. This would likely bring more bulls to the fore. This would imply that the bottom in MSFT shares was in since Microsoft already produced a higher low on January 6, above the range low from November 4. Both the Moving Average Convergence Divergence (MACD) indicator and the 9-day and 21-day moving averages are crossed over currently in bullish mode. This is implies that trades should expect the uptrend to continue until further notice. Support sits at $220.

MSFT daily chart

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Read More