QUESTION:
Give me a comprehensive update on MSFT earnings report released this week
RESPONSE:
This week, Microsoft (MSFT) released its earnings report, which has generated significant attention and analysis across the financial sector. Here’s a comprehensive update based on the latest available information:
1. Earnings Overview:
– Microsoft reported strong quarterly earnings, showcasing double-digit year-over-year growth in revenues and sales[1].
– Despite the overall strong earnings, Microsoft experienced worse-than-expected growth in its crucial AI businesses. This specific underperformance sent shares spiraling about 7% following the earnings announcement[2].
2. Stock Price Impact:
– Following the earnings announcement, Microsoft’s stock price experienced a notable drop. Specifically, the stock was down $6.85 to $416.07 on July 31, 2024[3].
– However, despite this immediate drop, analysts have overwhelmingly recommended buying Microsoft on the post-earnings dip, maintaining confidence in the AI story of the company[4].
3. Market and Analysts’ Reaction:
– The market’s reaction was mixed, with a significant initial drop in stock price. However, analysts remain optimistic about Microsoft’s long-term prospects. They argue that the company is trading 15% below its fair value, estimated at $498 per share[5].
– Microsoft’s stock has shown strong gains, increasing by approximately 12% year-to-date, compared to a 14% rise in the S&P 500 index over the same period[6].
4. Future Outlook:
– Looking forward, Microsoft’s net income margin is expected to remain around the same level as last year, leading to a projected net income of $98.6 billion and an annual GAAP EPS of $13.28[7].
– The company’s stock has seen extremely strong gains, with a 100% increase from levels of $215 in early January 2021 to around $425 now, versus an increase of about 45% for the S&P 500 over this roughly 3-year period[8].
In summary, while Microsoft’s recent earnings report highlighted some challenges in AI growth, the overall financial health of the company remains strong, with robust revenue growth and positive future projections. Analysts continue to support the stock, viewing the post-earnings dip as a buying opportunity.
References
[1] Generative AI Is Powerful—And Power Hungry [Forbes]
Microsoft reported strong quarterly earnings on Tuesday, with revenues and sales and showing double-digit year-over-year growth, writes Forbes’ Derek Saul. https://www.forbes.com/sites/meganpoinski/2024/08/01/generative-ai-is-powerful-and-power-hungry
[2] Forbes Daily: Microsoft’s AI Weakness Sends Shares Spiraling [Forbes]
Microsoft , but worse-than-expected growth in its crucial AI businesses sent shares spiraling about 7% following the earnings announcement. https://www.forbes.com/sites/daniellechemtob/2024/07/31/forbes-daily-microsofts-ai-weakness-sends-shares-spiraling
[3] Powell Industries, Mastercard rise; Pinterest, Lantheus fall, Wednesday, 7/31/2024
Microsoft Corp. (MSFT), down $6.85 to $416.07.
[4] Analysts overwhelmingly say buy Microsoft on post-earnings dip, AI story intact [CNBC]
Analysts overwhelmingly say buy Microsoft on post-earnings dip, AI story intact https://www.cnbc.com/2024/07/31/analysts-overwhelmingly-say-buy-microsoft-on-post-earnings-dip-ai-story-intact.html
[5] Microsoft Stock Surpassed The Consensus In Q4, What’s Next? [Forbes]
Overall, at its current price of $423 per share, MSFT is trading 15% below its fair value of $498 – Trefis’ estimate for https://www.forbes.com/sites/greatspeculations/2024/08/02/microsoft-stock-surpassed-the-consensus-in-q4-whats-next
[6] Microsoft Stock Surpassed The Consensus In Q4, What’s Next? [Forbes]
(NASDAQ: MSFT) has gained approximately 12% YTD as compared to the 14% rise in the S&P500 index over the same period. https://www.forbes.com/sites/greatspeculations/2024/08/02/microsoft-stock-surpassed-the-consensus-in-q4-whats-next
[7] Microsoft Stock Surpassed The Consensus In Q4, What’s Next? [Forbes]
Additionally, MSFT’s net income margin is likely to remain around the same level as last year, leading to a net income of $98.6 billion and an annual GAAP EPS of $13.28. https://www.forbes.com/sites/greatspeculations/2024/08/02/microsoft-stock-surpassed-the-consensus-in-q4-whats-next
[8] Microsoft Stock Surpassed The Consensus In Q4, What’s Next? [Forbes]
Amid the current financial backdrop, MSFT stock has seen extremely strong gains of 100% from levels of $215 in early January 2021 to around $425 now, vs. an increase of about 45% for the S&P 500 over this roughly 3-year period. https://www.forbes.com/sites/greatspeculations/2024/08/02/microsoft-stock-surpassed-the-consensus-in-q4-whats-next
