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Earnings Preview – Will Microsoft and Alphabet save the Nasdaq 100 and S&P 500?


MICROSOFT AND GOOGLE OUTLOOK:

  • Microsoft and Google’s parent company Alphabet will announce quarterly results on Tuesday after the market closes
  • For GOOGL, investors forecast EPA of $ 25.63 on revenue of $ 68.13 billion. For MSFT, the consensus earnings estimate is $ 2.18 per share on revenue of $ 49.03 billion
  • Microsoft and Alphabet’s quarterly performance and future-oriented commentary will be key for the technology sector and for the S&P 500 and Nasdaq 100

Most read: S&P 500, Nasdaq 100 Weekly Forecasts – bond yields hammer stock sentiment

Microsoft (MSFT) and Alphabet (GOOGL) will announce corporate earnings for the first three months of the year on Tuesday after the closing clock. These quality mega-cap companies have some of the biggest weights in both the S&P 500 and Nasdaq 100, so their stock performance can definitely set the tone for the broader market and skew short-term price action at the index level. For this reason, investors will keep a close eye on their quarterly results and, more importantly, their forecasts.

With the S&P 500 in correction area and the Nasdaq 100 in a bear marketprinted by rising yields and fears that the US economy is heading for a hard landing, Wall Street desperately needs a reason to be optimistic about the outlook and start redeploy capital into risk assets. As Microsoft and Alphabet produces robust numbers as in the previous term and provide constructive forward-looking comments, relentless sell activity could start decreasepaving the way for technologytechnology stabilize sector. If these two, however, hit hard disappoint and sounds a note of caution about the future, such as Netflix has, all bets are off. In the lattercasetraders must brace for more pain and turbulence in the stock spaceat least in the very short term.

Some of these tech darlings often have higher valuation multiples than the market (e.g. P / E) because they were able to deliver robust growth regardless of the economic landscape, but as their fortunes begin to change, investors may become more reluctant to pay a premium to own them.

ALPHABET (GOOGL) EARNINGS

Analysts expect EPS of $ 25.63 on revenue of $ 68.13 billion. For reference, the company has a track record of excellent performance, in fact it has beaten both top and bottom line consensus forecasts over the past six quarters, with its share price higher the day after the earnings announcement at each event during these observations. Obviously, past performance is not an indication of future results, but it does emphasize that management has done a good job of growing the business and profits.

In terms of financial results, traders need to focus on search engines and YouTube advertising revenue amid the winds of the Russia-Ukraine conflict and strong competition from TikTok. It is also necessary to monitor Alphabet’s cloud services segment to gain insight into the unit’s momentum in this increasingly crowded and competitive market. Last but not least, investors need to look at how leadership maneuver around current economic challenges, such as rising inflation, and how the trend in consumer prices is affecting the company’s costs and margins. Any size buy back shares authorization will be considered bullish.

MICROSOFT (MSFT) EARNINGS

Investors expect ESP from $ 2.18 billion on revenue of $ 49.03 billion. For Microsoft, it’s important to look at how the cash cow “Intelligent Cloud” business, which includes Azure, GitHubt and Windows Server, and whether it maintains a strong growth trajectory amid intense market competition.

The results of the “More personal computers” unit, which includes Windows, ads, devices, and games, will also be key, but more importantly, future-oriented comments about the unit’s prospects after the $ 75 billion cash transaction to acquire Activision Blizzard (video game maker). Rising inflation, supply bottlenecks and declining consumer spending are winds that could weigh the company’s second largest revenue-generating business, but guidance is needed to better determine how these variables are undermining growth and what management is doing to limit its detrimental impact.

Source: EarningsWhispers

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— Written by Diego Colman, Contributor

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