• 373 days Will The ECB Continue To Hike Rates?
  • 373 days Forbes: Aramco Remains Largest Company In The Middle East
  • 375 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 774 days Could Crypto Overtake Traditional Investment?
  • 779 days Americans Still Quitting Jobs At Record Pace
  • 781 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 784 days Is The Dollar Too Strong?
  • 784 days Big Tech Disappoints Investors on Earnings Calls
  • 785 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 787 days China Is Quietly Trying To Distance Itself From Russia
  • 787 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 791 days Crypto Investors Won Big In 2021
  • 791 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 792 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 795 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 795 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 798 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 799 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 799 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 801 days Are NFTs About To Take Over Gaming?
  1. Home
  2. Investing
  3. Stocks

Microsoft Beats Estimates as Earnings Season Heats Up

Microsoft Beats Estimates as Earnings Season Heats Up

Earnings season is here, and the U.S. stock market relies heavily on the tech sector and other mega-caps for broader gains 

On Tuesday, Microsoft reported better-than-expected earnings and revenue for the fiscal second quarter, while other major tech companies will report holiday-quarter earnings over the next few days.

The stock market has witnessed selling pressure after it emerged that the Federal Reserve is expected to raise interest rates sooner and more frequently than earlier anticipated, sparking a broad sell-off  in the tech sector.

Expectations of rising interest rates have sent investors fleeing from tech companies toward less-risky investments, most notably, insurance and finance.

All that has combined to make technology the worst-performing sector in the S&P 500 this year. Since its peak late last year, it has fallen more than 11%. So far this year, the best performing sectors are energy, financial services and consumer staples.

According to FactSet data, the tech sector is expected to report 16.1% revenue growth for CY 2021, better than the S&P 500 average growth of 15.8% over the timeframe.

Microsoft’s fiscal Q2 earnings and revenue for the fiscal second quarter showed $18.8 billion or $2.48 per share, versus $2.31 per share as expected by analysts. The company earned $51.73 billion in revenue vs. $50.88 billion as expected by analysts.

Revenue increased by 20% from a year earlier, compared with almost 22% growth in the previous quarter

Microsoft has seen continued strong growth Azure, its flagship cloud division, reporting 46% revenue growth for the segment. 

Productivity and business processes division revenues rose 19% to $15.9 billion, while Intelligent Cloud revenues were up 26% to $18.3 billion, and More Personal Computing revenues rose 15% to $17.4 billion 

The company’s shares fell nearly 5% after hours only to bounce back after it provided a forecast for the fiscal third quarter that also beat estimates.

Chief Financial Officer Amy Hood expects fiscal third-quarter revenue of $48.5 billion to $49.3 billion, topping the average analyst consensus of $48.11 billion.

Year-to-date, Microsoft’s stock was down 12.7% as of midday Tuesday, while the broader S&P 500 was down 7.5%.

Amazon, Microsoft’s biggest cloud rival, is down more than 15.4% year-to-date, and is expected to report Q4 2021 earnings on February 3rd 

Wall Street analysts expect Amazon to report revenue of $137.7 billion and earnings per share of $3.74. 

Meanwhile, thanks to its higher hiring costs the guidance for operating income is between $0 and $3 billion, a significant drop from $6.9 billion in Q4 2020.

However, JPMorgan's Doug Anmuth is still bullish on it, rating the stock as a strong buy with a $4,350 price target, which would imply an upside of 43%.

Apple Inc. is expected to report Q1 2022 earnings on Jan. 27, 2022 after the market closes. The company has a consensus ESP forecast of $1.89.

It is expected to see revenue growth in the single digits at around 6.5%, while earnings will grow about 12.5%. 

For the previous earnings report, Apple revenue fell short of expectations which Apple CEO Tim Cook attributed to larger-than-expected supply constraints. Yet, the company's overall revenue was still up 29% on an annual basis. However, recently Apple's supply chain pressures are easing.

Alphabet Inc. (NASDAQ: GOOG) is scheduled to report Q4 2021 earnings on February 1st before the market opens. The company has a consensus ESP forecast of $27.65. The company’s

shares gained over 65% last year, beating the Nasdaq 27% rise by more than double. Revenues are expected to be $59.32 billion, up 27.8% from the year-ago quarter.

Back to homepage

Leave a comment

Leave a comment