Major benchmarks saw a recent trend continue on Thursday morning as market participants grappled with the onslaught of earnings reports from dozens of different companies. Worrisome numbers on the macroeconomic front weighed on performance to some extent, but most investors focused squarely on individual stocks rather than the market as a whole. As of 11:15 a.m. EDT, the Dow Jones Industrial Average (DJINDICES: ^DJI) was down 58 points to 26,776. However, the S&P 500 (SNPINDEX: ^GSPC) climbed 2 points to 3,007, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) was higher by 47 points to 8,167.
Among the companies grabbing the most attention on Thursday morning were Tesla (NASDAQ: TSLA) and Microsoft (NASDAQ: MSFT). Tesla is setting itself up as a comeback story, and its latest results fit in with that narrative very well. Meanwhile, Microsoft continued doing what it's done successfully for a long time now, and investors liked what they saw.
A profit for Tesla
Shares of Tesla soared 16% after the electric-vehicle specialist announced surprisingly strong results for the third quarter. The most shocking thing about the report was Tesla's $143 million in net income, demonstrating the company's profitability even including some extraordinary items that weighed down stronger adjusted earnings results.
Tesla's profit might not look all that great compared to year-earlier results, as adjusted earnings were down 36% from what it posted in the third quarter of 2018. However, most of those following the stock had expected the automaker to lose money, because margin levels on the increasingly popular mass-market Model 3 aren't as high as what the company makes on higher-priced vehicles.
Tesla also had other good news to supplement its latest quarterly results. The company sees itself on track to deliver at least 360,000 vehicles during 2019, which is consistent with the early projections it made almost a year ago. Tesla also expects a launch of its Model Y crossover in the summer of 2020, with its electric semitruck following suit at some point in the coming year.
CEO Elon Musk has gotten a lot of criticism for how Tesla got to where it is today, but the company's financial progress has been solid. If the automaker can build momentum from its performance rather than seeing further setbacks, then Tesla could finally be on the road to long-term success.
Microsoft keeps climbing into the cloud
Meanwhile, tech giant Microsoft enjoyed a more modest 2% rise in its share price. The company reported fiscal first-quarter results that reflected the continuing popularity of cloud computing.
Revenue for the quarter jumped 14% from year-ago levels, sending net income higher by 21%. Microsoft reported especially strong growth in its intelligent cloud segment, with a 27% rise in sales stemming from 59% revenue gains in the Microsoft Azure cloud platform.
Microsoft kept benefiting from moving key products into the cloud, as well as its software-as-a-service offerings. The productivity and business processes segment saw sales rise 13% as business customers of the Office 365 productivity suite pushed revenue higher by 25%. The number of consumer subscribers to Office 365 also kept growing, hitting 35.6 million, and other cloud-based software products saw similar growth.
CEO Satya Nadella has been instrumental in getting Microsoft to embrace this shift, and he continues to see opportunity. "The world's leading companies are choosing our cloud to build their digital capability," Nadella said, and the executive is having Microsoft become even more innovative as it seeks to serve cloud customers in the years to come.
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Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Microsoft and Tesla and recommends the following options: long January 2021 $85 calls on Microsoft. The Motley Fool has a disclosure policy.
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