Will Microsoft Earnings This Week Be Bullish For The Markets?
πππUS Tech stocks fell sharply last week due to disappointing results from Tesla and Google which triggered the selloff. However the Bearish sentiments may change to Bullish when Apple, Amazon, Meta Platforms and Microsoft report their earnings this week. The next FOMC meeting is also scheduled between July 30 to 31 where all eyes will be focused on Jerome Powell as to when he will cut interest rate.
$Microsoft(MSFT)$
Investors will be watching closely for sustained growth in Microsoft's cloud platform Azure which has been fuelling sales and earnings growth in previous quarters.
Azure has benefited from the AI boom as customers train and run AI workloads through the cloud platform. Cloud revenue is expected to reach USD 37.2 billion.
A massive IT outage caused by issues with CrowdStrike software has caused Microsoft laptops and PCs to show a blue screen of death on July 19. Fortunately Microsoft's share price was not too badly hit.
Microsoft is up 0.3% today but down 3.8% last week. However it is still up 15% year todate. In 2023, Microsoft is up 27%.
Wall Street Analysts are bullish on Microsoft with a Buy rating, Target price of USD 506.27, an upside potential of 18%.
Microsoft is a Tech Titan most well known for its software products such as the Windows line of operating systems, Microsoft 365 Suite of productivity applications, the Azure Cloud Computing Platform and the Edge Web browser.
Microsoft's USD 13 billion investment in OpenAI has put it at the forefront of the AI revolution. OpenAI has announced a new AI Model called GPT-40, which is capable of realistic voice conversation and able to interact across text and image in May 2024.
On July 25, OpenAI has launched a test version of SearchGPT, a new AI powered search engine to be implemented into ChatGPT that could enter OpenAI into an internet search market currently dominated by Google. As a result $Alphabet(GOOG)$
Microsoft's huge investment into OpenAI may well give it a boost to be one of the leaders in the AI rally.
I will be watching Microsoft's earnings closely as well as its capital expenditure on AI spending and how it is monetising it. I will also look out for CEO Satya Nadella 's guidance on expected future financial performance. A upbeat or a cautious management outlook for the next quarter or year can significantly impact the stock.
Earnings announcements can often lead to volatile swings in the short term but in the long term, it is the fundamentals that matter. I have confidence that Microsoft will continue to grow exponentially in the future due to its solid fundamentals, excellent management and dominant position in the software and cloud computing business.
So if Microsoft's share price drop, I will be looking to buy this wonderful stock and hold long term.
As Warren Buffett likes to say "Price is what you pay, value is what you get".
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