Microsoft Earnings Reversal and Warning – “A Shot Across the Bow”

Microsoft (MSFT) created a triple bottom base, with lows on October 13, November 04, and this year on January 06. This drawdown represents a 38.96% dive from its highest point in November 2021, to its lowest point on November 2022.

More than one year later, the company is trading at a discount to earnings, 18x current versus 23x over the past 20 quarters/5 years.

All things considered, the reversal from the Microsoft earnings pop last night has us focused on our current positioning in growth stocks.

Microsoft Guidance 

• Microsoft (MSFT) forward guidance outweighed better-than-expected earnings late Tuesday.
• ASML (ASML) beat forecasts, with Boeing (BA) and Tesla (TSLA) on deck today after the close.

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Tesla will headline earnings later tonight, and with that our focus will shift to2023 guidance, especially following Microsoft’s dissapointment. Tesla’s (TSLA) recent price cuts worldwide have helped the stock move back above recent lows over the past few weeks. Will it be enough?

Microsoft earnings edged past analysts estimates after the close on strong cloud-computing growth. That said, management issued weak guidance.

MSFT stock, surged in after hours trading, then reversed lower (-6.00 pts). Over the past 4 ~ 5 years EBITDA traded around 23x forward, while currently trading at 18x. 

Microsoft earnings fell 6% year over year narrowly beating Q2 estimates. Revenue rose nearly 2%, the smallest increase in more than six years. Azure revenue and cloud-computing services surged nearly 40%  slightly exceeding consensus views. On the plus side, analysts on CNBC and Bloomberg highlighted concerns about Azure growth going into Tuesday’s report.

Will will discuss our thoughts and potential trades on Microsoft earnings throughout the LIVE broadcast today, so be sure to tune in at the opening bell.

Join us today in the trading room for our LIVE broadcast during market hours, as we navigate the current environment. Watch, listen, and trade from 9:20 AM to 4:15 PM Monday through Friday.

Happy Trading, 

Vinny

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