Alphabet falls 10%, Microsoft rises 4% after earnings
In short
- Microsoft reported revenue of $92.28bn (+19%) and Azure revenue of $33.17bn (growth above 48%). Its shares are up about 4% in after-hours trading.
- Alphabet reported revenue of $127.6bn (+25%), but capital spending of $51.4bn and free cash flow of minus $9.1bn. Its shares are down about 10% after hours.
- Microsoft guides to Azure growth of 49–50% next quarter. After-hours moves can change when the market opens.
The two biggest cloud companies reported on the same evening, and the market gave them opposite verdicts. Yesterday we covered what the market expected from the reports. Here is what came out.
What happened
Microsoft closed its fiscal first quarter with revenue of $92.28bn, up 19%, against $90.69bn expected. Adjusted earnings per share were $4.89 versus $4.73 expected. Azure revenue was $33.17bn (growth above 48%), the first time the company has disclosed it in dollars. Capital spending was $45.2bn (about +30%) against up to $50.67bn projected, and free cash flow was $18.63bn, down 27%.
For next quarter Microsoft guides to revenue of $96bn to $97.1bn against $95.6bn expected, and Azure growth of 49–50% against 45.1% expected. Amy Hood said: “We still have demand that exceeds supply”.
Alphabet reported revenue of $127.6bn, up 25%, but earnings per share fell to $2.12 from $2.87 a year earlier. About 55 cents of the gap comes from an unrealised $8.7bn loss on equity investments. Operating income was $40.6bn. Google Cloud brought in $30.7bn, and CEO Sundar Pichai said the cloud business grew 48% and is now on an annual run rate above $70bn.
Alphabet capital spending was $51.4bn against about $24bn a year earlier, and free cash flow was minus $9.1bn. Investing.com describes the result as a profit miss, and the shares are down about 10% after hours.
At yesterday’s close Microsoft shares were $531.01 and Alphabet shares $324.89. According to HawkValue data the S&P 500 is at 7,743.98 points (+0.28%) and the Nasdaq 100 at 29,813 points (+0.55%).
What it means for you
The maths: an Alphabet share costs $324.89, about £244.51. A 10% drop is about £24.45 per share, or roughly £100 on every £1,000 held. A Microsoft share costs $531.01, about £399.63, and a 4% rise is about £15.99 per share, or roughly £40 on every £1,000. See live prices on the UK stock market page.
Bottom line
Microsoft beat expectations for revenue and Azure, raised its guidance and reported capital spending below forecasts. Alphabet reported revenue close to expectations, but with lower earnings per share, capital spending of $51.4bn and negative free cash flow. The market reacted with about +4% and −10% after hours.
Sources: Fortune · SiliconANGLE · Investing.com · BigGo Finance
For information only. This is not investment advice.
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