The Zacks Analyst Blog Highlights Microsoft, Amazon.com, Alphabet and NVIDIA
For Immediate Release
Chicago, IL – October 27, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Microsoft Corp. MSFT, Amazon.com, Inc. AMZN, Alphabet Inc. GOOGL and NVIDIA Corp. NVDA.
Here are highlights from Thursday’s Analyst Blog:
What's in Store for Microsoft After Blowout Earnings?
One of the biggest tech providers globally, Microsoft Corp., recently posted blockbuster earnings results.
The Washington State-based company logged a net income of $22.3 billion, or $2.99 a share, for the quarter ending in September, up 27% from the same period last year. The company also saw its overall revenues in the fiscal first quarter increase 13% from the same period a year before to $56.5 billion.
Microsoft’s encouraging fiscal first-quarter earnings were primarily fueled by a bounce back in its Azure cloud-computing segment. The Intelligent Cloud unit’s revenues came in at $24.3 billion during the last quarter, up 19% from the year-prior period.
Additionally, revenues from Azure and other cloud services increased 29% in the fiscal first quarter. In reality, revenues from the Azure cloud-computing platform improved for the first time since the third quarter of last year.
The other strong segments were Microsoft’s Personal Computing, and Productivity and Business Processes units. The Personal Computing segment, which includes Windows and Xbox services saw its revenues for the last quarter rise 3% to $13.7 billion year over year.
Similarly, the Productivity and Business Processes segment, which includes LinkedIn and Office registered $18.6 billion in revenues for the fiscal first quarter, up 13% from a year earlier.
To top it off, the company’s management has delivered promising forward guidance. Overall revenues for the fiscal second quarter are estimated to be in the range of $60.4 billion to $61.4 billion and are expected to be driven predominantly by growth in Azure.
Chief Financial Officer Amy Hood added on the earnings call that Microsoft is anticipating a 26% to 27% jump in Azure revenues for the fiscal second quarter.
And why not? The company is certainly benefiting from AI tailwinds in the cloud. An increase in demand for Chat-GPT creator OpenAI is expected to benefit Microsoft shortly.
The AI market, in particular, is well-poised to explode soon, with Bloomberg Intelligence predicting the market to grow to $1.3 trillion over the next decade from only $40 billion in 2022.
This demand for AI could easily add to the revenues of behemoths like Microsoft, Amazon.com, Inc., Alphabet Inc. and NVIDIA Corp., to name a few, which are looking forward to shifting more workload to the public cloud.
Slow but steady growth in Office 365 and Dynamics services is also expected to drive Microsoft’s top line, while the full rollout of the company’s AI-driven Copilot subscription should surely boost the Productivity and Business Processes unit. The current strength in the gaming segment could easily produce noteworthy cash flows.
And with things looking up for Microsoft, its expected earnings growth rate for the current year is 11.3%. Its shares are estimated to scale up by 14.1% in the next year.
The Zacks Consensus Estimate for its current-year earnings has increased by 0.2% over the past 60 days. Microsoft at present flaunts a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
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