Big Earnings Afternoon: Microsoft, Alphabet, Starbucks & More
Market performance today was less than stellar, but nothing worth worrying too much about: the S&P 500 was flat all day following yesterday’s close notching its sixth all-time high so far this year, -0.06%. The Dow actually gained +133 points, +0.35%, but it was alone in the green today: the Nasdaq sold off -118 points, -0.76%, while the small-cap Russell 2000 was down a similar -0.71%.
December Job Openings and Labor Turnover Survey (JOLTS) showed some mixed results earlier today: while job openings rose back over 9 million for the first time since September of last year, 9.03 million (the previous month was revised up from 8.8 million to 8.925 million), we’re still well off the 10 million-plus we’d been seeing as recently as April of 2023. Job Quits, on the other hand, fell to their lowest levels since early 2021: 3.39 million. We’d seen a 4+ million print last May. Thus, longer-term progress is apparent, though employers are still looking to fill seats.
Q4 earnings season hits its busiest day so far, and it starts this afternoon with Microsoft MSFT, which posted its sixth-straight earnings beat: $2.93 per share outpaced the $2.76 expected (and $2.32 per share in the year-ago quarter). Revenues likewise topped expectations, with $62 billion brought in for fiscal Q2 from $61 billion anticipated. Azure growth outperformed as well, reaching +30% in the quarter from a projected +27.5%. Revenue growth at Office 365 was strong at +17%, possibly on growth from its A.I. chatbot Copilot. Microsoft’s recent Activision acquisition helped Xbox gain +60% in the quarter.
Alphabet GOOGL beat the consensus earnings forecast by 4 cents per share to $1.64 per share (up more than +50% year over year) for its fourth-straight quarterly earnings beat. Revenues also outperformed expectations to $72.3 billion (accounting for traffic acquisition costs [TAC], which is not reported on Alphabet’s headline; $86.3 billion in revenues were without subtracting $13.986 billion in TAC costs. Its Cloud business surpassed estimates — $9.19 billion versus $8.94 billion expected — though YouTube was a hair below forecast to $9.20 billion in the quarter.
Advanced Micro Devices AMD met earnings consensus at 77 cents, extending its string of quarterly non-misses on earnings since Q4 2018. Revenues of $6.17 billion came in ahead of the $6.11 billion analysts were looking for, though revenue guidance was down for the coming quarter: $5.4 billion versus $5.7 billion expected. Data Center brought in $2.3 billion in the quarter, but is expected to be flat with a pending seasonal decline in server sales (similar to Intel). Shares are down -3% on the news, though at +80% over the past three months, the stock had been priced for perfection.
Starbucks SBUX missed expectations on both top and bottom lines: earnings of 90 cents per share on quarterly sales of $9.4 billion were a tad light of the 92 cents per share and $9.58 billion anticipated. All three main regional segments were lower than expected: Global was +5% versus +7.2% estimated, North America +5% versus +5.8% forecast, and International +7% from +13.2% projected. However, shares are up +3% on the news, now trading flat year to date.
International snack giant Mondelez MDLZ outperformed estimates on both earnings and sales in its Q4 report after today’s close, reporting 84 cents per share, which bettered the 78 cents expected (and 73 cents per share a year ago) on revenues of $9.31 billion, which narrowly outpaced the $9.30 billion analysts were looking for. Both North America and Asia came in slightly below expectations, and shares are trading down -3.7% in the after-market.
Skyworks Solutions SWKS also reported earnings results for its fiscal Q1, beating by two cents on the bottom line to $1.97 per share (though well off the $2.59 reported in the year-ago quarter), while revenues of $1.20 billion met consensus estimates. Nest quarter earnings guidance is also slightly down from earlier projections, though a recovering smartphone market and record free cash flow have helped the stock move up +2.7% in late trading.
Tomorrow morning brings us private-sector payroll results for January from Automatic Data Processing ADP, along with that company’s fiscal Q2 earnings report. We’ll also see earnings results from Boeing BA, Mastercard MA and Novo Nordisk NVO, among many others. We’ll also get the latest Fed decision on interest rates as this year’s first FOMC meeting adjourns tomorrow at 2 pm, though it is unanimously expected that no moves from the current 5.25-5.50% Fed funds rate will be made.
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The Boeing Company (BA) : Free Stock Analysis Report
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Mastercard Incorporated (MA) : Free Stock Analysis Report
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Novo Nordisk A/S (NVO) : Free Stock Analysis Report
Starbucks Corporation (SBUX) : Free Stock Analysis Report
Skyworks Solutions, Inc. (SWKS) : Free Stock Analysis Report
Mondelez International, Inc. (MDLZ) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
