Q4 earnings season rolls along, and markets are trading rather… agnostically. For the second day in a row, the four major indices have been dancing around a zero balance — this is keeping their overall strong January intact, even as earnings reports from some of the biggest, most challenged corporations demonstrate the challenges in their respective businesses. The Dow was +0.33% on the day, while the S&P 500 was -0.07%, the Nasdaq -0.26% and the small-cap Russell 2000 -0.24%.
The big report today came after the close: fiscal Q2 for Microsoft MSFT posted a 5-cent earnings beat to $2.32 per share (though still -8% from the year-ago quarter). Revenues in the quarter of $52.75 billion came in a smidge below the $52.93 billion Zacks consensus. Shares are up +4% in late trading on the news, after being one of those flat-trading companies over the past week.
Its Azure cloud segment outpaced expectations slightly: +30.8% in the quarter versus +30.6% expected. That said, the company’s cloud business is clearly slowing as corporate customers look for ways to cut costs in the current inflation environment. On the conference call, we expect some discussion regarding Microsoft’s reported $10 billion in Open AI, which is home to the much-hyped ChatGPT, in addition to solutions the company has about improving its cloud margins.
Microsoft has an excellent track record on earnings beats. True, it did post a miss back in Q4 of last year, but the previous negative earnings surprise before this was way back in 2016. This top Big Tech play proves most every quarter that it knows how to keep its segments humming — and now it’s proving it can do so even in grimmer economic times, reminiscent of Netflix’s NFLX impressive quarterly report last week.
Texas Instruments TXN put up even better quarterly numbers after today’s closing bell, beating on both top and bottom lines in its Q4. Earnings of $2.13 per share on $4.67 billion outperformed the $1.96 per share and $4.56 billion in sales in the Zacks consensus. Shares have been jumping around in the after-hours; perhaps a conference call will help shore this stock up, as well. TXN is up +8.5% year to date.
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