Microsoft Earnings Preview
City Index | Jan 29, 2020 05:36
Wall Street is bracing itself for another strong quarter from the tech giant.
When: Wednesday 29th January after market close
Expectations:
Microsoft (NASDAQ:MSFT) shares had an impressive 2019, rallying 56% across the year and outpacing the broader US market (S&P gained 22%). Microsoft is now one of the three US companies to be a member of the exclusive $1 trillion dollar club, alongside Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOG).
Azure
Microsoft (NASDAQ:MSFT) has benefited greatly from its cloud business Azure. In the most recent quarter, Microsoft reported a strong 59% yoy increase in revenue. Traders will be watching closely to Azure’s performance in Q2 of 2020 to see whether this growth can be maintained? Expectations are for a deceleration of growth in the segment in line with the broader trend:
Azure Revenue increase:
Q3 2019 75%
Q4 2019 68%
Q1 2020 59%
Q2 2020 53% exp.
53% growth is still exceptional as Microsoft’s hybrid cloud is well positioned against peers Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL). Recent surveys by Morgan Stanley (NYSE:MS) and Credit Suisse (SIX:CSGN) showing that Azure was the preferred cloud enterprise option boding well for the outlook.
Analysts’ recommendations
According to FactSet data among 35 analysts covering Microsoft (NASDAQ:MSFT) stock, 33 have a buy rating, 2 have hold and 0 have sell.
Chart thoughts
Microsoft (NASDAQ:MSFT) trades above its 50, 100 & 200 sma in a bullish chart. Whilst it tested the 50 sma earlier this week, a rebound in the price means it is currently around 2% above the 50 sma.
Immediate support can be seen at yesterday’s low $160. Whilst resistance can be seen at the all-time high of $168.19.
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