Microsoft Corp. (NASDAQ)
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The Windows OS developer joined the widening group of tech companies that partially lost their market values this month. In almost every case, a price drop happened despite solid, and even better-than-expected quarterly numbers.
This all started with Google-parent Alphabet's decline last week, after only one conventionally weak spot has been discovered in its YouTube segment, while other parts of its business performed strongly, though didn't break any new records. In a very similar way, late yesterday evening Microsoft posted its earnings per share (EPS) of $2.95 on sales of $64.7 billion instead of EPS of $2.94 per share on sales of $64.38 billion in consensus estimates. Money-generation indications showed only an inch higher compared with the recent two quarters, despite 4.5% growth in revenue quarter-by-quarter and nearly 15% jump in quarterly revenue year-on-year. However, this is not enough reason for an immediate continuation of the price rally, so that Microsoft share price went down to test the levels well below $400, losing more than 6.5% already within the first hours of the extended trading on Wall Street.
A nominal excuse for Microsoft share price sinking was attributed to its Azure cloud business growth pace at 29% to slightly miss overheated average analyst pool bets on 30.2%, probably made out of the blue beforehand. Anyway, a slowdown is detected compared to 31% YoY at the end of the previous quarter. Now, searching for a new bottom in one of the three most capitalized companies in the world would become another challenge for the nervous market community during the hot corporate reports' season. A price discount against the fresh all-time high at $468.35 (set on July 5) reaches a large amount of about $75 per share, or 16%, when moving within current price ranges.
By the way, AI (artificial intelligence) related pace accounted for about 8% of Azure's numbers, up from 7% in Q1 to prove higher AI demand. Good for other giants' business on the AI basis, but no obstacle for some further price adjustment in both Microsoft stock and broader markets. Capital spending jumped to $19 billion from $14 billion in Q1 2024 and $10.7 billion in Q2 2023. Revenue in productivity and business processes rose 11% to $20.3 billion to lay the backbone for a more profitable future. However, the current price move may lead to a test of lower dips between $360 and $375, last seen in December 2023, according to our estimates. These technical levels may evoke a stronger buying activity.
Microsoft Corp. (NASDAQ)
Ticker | MSFT |
Contract value | 100 shares |
Maximum leverage | 1:5 |
Date | Short Swap (%) | Long Swap (%) | No data |
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Minimum transaction volume | 0.01 lot |
Maximum transaction volume | 100 lots |
Hedging margin | 50% |