After the earnings presentation Alphabet (GOOG, GOOGL) On Tuesday, Microsoft (MSFT) and Meta Platforms (META) are the next tech stocks on the Magnificent Seven to report its third quarter results this Wednesday, October 30 at the close of the market.
The analysts of Wall Street are optimistic ahead of Meta’s third-quarter earnings report. They expect positive revenue and profit numbers, thanks to Facebook parent company’s AI ad optimization and extensive cost cuts, which have included several rounds of layoffs and a retreat from some of his virtual reality projects.
Investors will be watching for signs that Meta can continue to grow. The company is reportedly working on a search tool for its AI chatbot. Wall Street also expects strong guidance for the current quarter, although analysts believe costs could be higher than expected.
Below, what analysts are saying ahead of the tech giant’s earnings report.
Bank of America: “AI Top Pick”
Analysts at Bank of America said they expect a “modest” earnings surplus from the tech giant on Wednesday. They forecast a report of up to $47.5 billion in revenue, which would represent an increase of 18% compared to the previous year.
Meta is a “top AI pick,” the analysts added, pointing to a number of tailwinds, including strong growth in Meta’s AI-powered advertising business, continued growth among younger users and more growth opportunities in AI in general.
Wall Street: what investors expect from Microsoft
Investors and analysts will be watching Microsoft’s results for the latest signs of customer demand for artificial intelligence, as the company invests heavily to expand its capacity to train and operate massive AI models, amid questions about the effectiveness of the company’s AI tools for business.
Microsoft will report its results for the three months ended September 30, 2024, the first quarter of its fiscal 2025, after the stock market closes. Beyond its own financial fate, the company’s results have become an indicator of broader demand for AI from large enterprise customers.
Some of the key numbers to watch
Wall Street analysts expect Microsoft to post revenue of $64.51 billion, up 14% from a year ago, nearing the high end of the $63.55 billion to $64.8 billion range in the guidance Microsoft provided for the quarter. .
Analysts project earnings of $3.08 per share, up from $2.99 per share in the same quarter last year, according to Zacks Investment Research, as reported by Nasdaq.
Other metrics to watch include AI’s contribution to Microsoft Azure’s revenue growth. For reference, AI contributed 9 percentage points to Azure’s total 33% growth in fiscal 2024. These AI contributions include revenue from Microsoft’s Azure OpenAI service, which is based on technology from its key AI partner.
Microsoft has not yet reported the specific revenue contribution of Microsoft 365 Copilotwhich offers AI to improve your productivity tools and business applications. Any new disclosure would receive widespread attention.
Capital spending will also be closely watched. The company reported a record $19 billion in capital expenditures in the June 2024 quarter alone, largely to support its long-term cloud and AI infrastructure. Microsoft CFO Amy Hood told analysts to expect an even bigger increase in capital spending in the coming years.
In an Oct. 17 report, Morgan Stanley equity analysts Keith Weiss and Josh Baer noted that Microsoft stock has underperformed relative to its peers over the past three months due to concerns about IT spending. capital and the return on massive investment in AI.
“In our view, sentiment is setting up an opportunity for stocks to climb a ‘wall of worries’ in the coming months,” Morgan Stanley analysts wrote, describing this week’s earnings report as “a possible first step for reverse investor caution ahead of exciting [segunda mitad del año fiscal 2025] for Microsoft.”
Bank of America Securities research analysts Brad Sills and Carly Liu wrote that they expect the results to meet or beat their revenue estimate of $64.7 billion, “driven by the continued migration of workloads to Azure.” and upgrade momentum in the Office premium E3/E5 enterprise licensing cycle, somewhat offset by weakness in PC/Windows.”
BofA analysts also wrote that they expect Azure’s growth acceleration in the second half of the fiscal year to be the next catalyst for Microsoft stock overall.
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
