Google and Microsoft shares higher as earnings impress

[MongiIG]

Despite a drop off in digital advertising at Snap, Google’s ad revenue held up and the stock rose in extended trade. Microsoft's stock also closed higher all-session despite some volatility, after it delivered a positive outlook.

 

 Jeremy Naylor | Writer, London | Publication date: Wednesday 27 July 2022 

Tech earnings

Tech earnings got underway last night. Microsoft Microsoft Corp (All Sessions) said it sees double-digit growth this fiscal year as it continues to benefit from the shift to hybrid work models that have accelerated during the pandemic.

Despite the positive forecast for this new fiscal year, Microsoft's two full results missed expectations. We saw earnings per share (EPS) of $2.23, $0.06 lower than forecast. And while revenue rose 12% year-over-year (YoY) to $51.8 billion, which is driven by Microsoft's cloud computing division, that, too, came in short of estimates of $52.4 billion. This is mainly due to PC shipments experiencing a big decline in the recent quarter - nearly 13% according to Gartner. It's the sharpest decline in nine years, thanks to geopolitical tensions, inflation and continued supply chain challenges.

Let's take a look at all-sessions trade on the IG platform. We're currently down one third of 1%. But you can see yesterday, all sessions late last night, we saw a considerable amount of volatility in the share price for Microsoft, which at one point it was very close to disappearing below this line of support, taking us there on this down to levels not seen since May 2021, but recovery underway and shares pretty much holding on to where they ended out yesterday's session.

Google

Meanwhile, Google's owner Alphabet Inc - C (All Sessions) also rose in extended trade despite earnings and revenue missing estimates. Let's take a look at the numbers: EPS at 1.21 against the 128 expectation, revenues also falling short just shy of $70 billion with investors reacting positively to the news that sales at Google Search, the group's biggest moneymaker, beat expectations.

Travel and retail advertisers also drove an increase in nearly 14% in search ad sales for Google during the second quarter which at $40.69 billion beat FactSet estimates of $40.15 billion. The result was nonetheless quite underwhelming. YouTube ad revenue interestingly rose $7.34 billion. We have been looking for $7.5 billion so that was short of forecasts.

Alphabet share price

Let's take a look at the share price for Alphabet, which owns Google, and we are trading pretty much in the middle of this band that we've got here between $102 and $120 currently trading at 10909.

Yesterday we saw a rise in extended trade around about two-and-a-half percent. But since then we've seen a little bit of an easing back. But the broad message is that we've got a continuation of this trend trading that we've seen between those two extremes.