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- Stocks to Beat Q3 Consensus Expectations: Microsoft
Stocks to Beat Q3 Consensus Expectations: Microsoft
The software giant added nearly 4.5% to its market value in after-hours on October 24, but more space to grow up is available. The current price range is more than 5% below the Windows maker's mid-July high at $366.78, while a generally bullish pressure was undeniable throughout the year, as the stock already gained nearly 42% since the end of December 2022. Microsoft remains a favourite of the investing community, as its shining quarterly results outweigh rather cautious preliminary estimates on both sales and profit lines. The financial team of Bill Gates announced its earnings per share (EPS) of $2.99 on revenue of $56.52 billion, while analysts polled by Reuters anticipated EPS of $2.65 on revenue of $54.53 billion, and this was a big difference.
The company also said its Azure cloud business was 29% up YoY in the quarter, compared with Wall Street consensus of 26%. By contrast, the Google-parent Alphabet's cloud division showed its slowest growth in 11 quarters, even though it amounted to 22.5%. If so, it can be considered as a competitive success for Microsoft, at the time when many corporate clients had to curb their budget spending on cloud-related services, including expensive artificial intelligence (AI) tools. Microsoft, as well as NVIDIA, seem to become the two AI world bosses. In the case of Microsoft, this happens because of its large and timely investment into the segment even before the pandemic, including a partnership with a famous OpenAI startup, which produced a viral ChatGPT chatbot.
The company's revenue in other productivity and business processes was up 13% to $18.6 billion, while sales in personal computing was also up 3% to $13.7 billion. The stock moderated its initial gains only after Microsoft's CFO Amy Hood estimated its next quarter's revenue at levels around $60.9 billion, which was not low but just in line with the consensus guidance. Yet, Goldman Sachs group of analysts quickly raised its target by $50 to $450 per share hot on the trail after the report, and we essentially concur in this assessment.
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