The major US indices are continuing their move to the upside what the NASDAQ index leading the way with a gain of 0.83%. The Dow industrial average is holding onto a 0.24% gain. Closing positive in the Dow would be the 12 consecutive up day for that index.
- Dow industrial average of 82.76 points or 0.23% at 35493.67
- S&P up 18.82 points or 0.41% at 4573.53
- NASDAQ up 116.88 points or 0.83% at 14175.71
After the close Microsoft and Alphabet will report earnings. The expectations are for:
Microsoft:
- Expected Q4 EPS: $2.55 up 14.3% YoY from $2.23.
- Expected Q4 Revenue: $55.48 billion up 7% YoY its slowest since 2017.
- Previous quarter performance: surpassed both EPS and revenue expectations.
- Comments: Best quarter anticipated in Microsoft’s 48-year history, with strength attributed to the cloud business and AI initiatives.
- CEO Satya Nadella announced that the company won’t increase salaries this year.
- Microsoft is predicted to report about 25% YoY growth in Azure public cloud’s revenue, a competitor of Amazon Web Services and Google Cloud Platform.
- Microsoft and OpenAI have furthered their alliance with the development of a new chatbot powered in part by OpenAI language models, used for data analysis.
- Microsoft’s deal to acquire Activision Blizzard for almost $69 billion is closely watched by investors. Earlier this month, an appeal to stop the transaction was denied, and Activision shares are nearing the $95 Microsoft agreed to pay.
Microsoft’s shares have risen 44% year to date, while the S&P 500 has seen a 19% increase. Today, it’s shares are currently up $6 or 1.75% at $351.12
Alphabet:
- Expected Q2 EPS: $1.34 up 10.7% YoY from $1.21.
- Expected Q2 Revenue: $72.82 billion up 4% YoY.
- Previous quarter performance: revenue and earnings topped estimates after four straight quarters of missing expectations.
Details show:
- Google Cloud is expected to report $7.87 billion, and YouTube ads $7.43 billion, according to StreetAccount.
- Traffic acquisition costs are estimated at $12.37 billion, according to StreetAccount.
- Alphabet is anticipated to report YoY growth in single digits for the fourth consecutive quarter due to a decrease in digital ad spending amid economic concerns.
- The company continued to cut costs and implement layoffs in Q2, including job cuts at navigation unit Waze, which is being merged with Google’s own tools.
- Q2 was dominated by artificial intelligence advancements. Google announced AI features like Search Generative Experience (SGE), which can synthesize search results from complex queries. Google also revealed the merger of Google Brain with DeepMind and a partnership with Character AI, a startup that develops AI chatbots.
- Despite a struggling ad market, Google Cloud, a competitor to Amazon and Microsoft, is expected to report a 25% growth, following its first operating profit in Q1.
Alphabet shares have increased by 38% this year(vs S&P 500’s 19% rise). Today, Its shares are up $1.40 or 1.15% out $122.92