Microsoft Cloud Growth Slows

And, Texas Instruments' weak demand.

Steven Lerner 25.Jan.2023

Today is Wednesday, January 25, 2023.

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Microsoft Cloud Growth Slows

It was a mixed bag of financial results for Microsoft (Nasdaq: MSFT), which caused shares to decline by 1.01% in after-hours trading on Tuesday.

Financials: Microsoft reported earnings of $2.32 per share in the quarter, which was better than expected. But revenue came in at $52.7 billion, which was lower than expected.

Growth: In addition to the 2% increase in revenue from the same period last year, revenue for LinkedIn grew by 10%.

Cloudy: Azure and other cloud services grew by 31%, but that represents a slowdown in the category. Last quarter, cloud services grew by 35%. That means that growth for Microsoft’s cloud business has slowed.

Also: Revenue for personal computing dropped by 19%. The PC market seems to be shrinking. In fact, the net income for the entire company decreased by 7%.

Stock Price: Shares of Microsoft are down 16% in the last 12 months, which is better than most technology stocks. The stock is up 2% in the last 30 days.

Final Thoughts: While there’s a lot to like about Microsoft (including its investments in artificial intelligence), the slowing cloud business and decreasing PC market are big problems.

Notables

Notable Earnings Today: Tesla (Nasdaq: TSLA), Boeing (NYSE: BA), AT&T (NYSE: T), ServiceNow (NYSE: NOW), Progressive (NYSE: PGR), International Business Machines (NYSE: IBM), ASML (Nasdaq: ASML), Lam Research (Nasdaq: LRCX), Abbott Labs (NYSE: ABT), Steel Dynamics (Nasdaq: STLD), Freeport-McMoRan (NYSE: FCX), Crown Castle (NYSE: CCI), Nasdaq (Nasdaq: NDAQ), Wolfspeed (NYSE: WOLF), NextEra Energy (NYSE: NEE), NextEra Energy Partners (NYSE: NEP), Las Vegas Sands (NYSE: LVS), Hess (NYSE: HESS), CSX (Nasdaq: CSX), Automatic Data Processing (Nasdaq: ADP), Seagate Technology (Nasdaq: STX), Axalta Coating Systems (NYSE: AXTA), Boot Barn Holdings (NYSE: BOOT), Ethan Allen Interiors (NYSE: ETD), Flex (Nasdaq: FLEX), General Dynamics (NYSE: GD), Kimberly-Clark (NYSE: KMB), LendingClub (NYSE: LC), Levi Strauss (NYSE: LEVI), Norfolk Southern (NYSE: NSC), Packaging Corp of America (NYSE: PKG), Raymond James Financial (NYSE: RJF),SL Green Realty (NYSE: SLG), Textron (NYSE: TXT), U.S. Bancorp (NYSE: USB), United Rentals (NYSE: URI).

Notable IPOs Today: GENELUX CORP (Nasdaq: GNLX), Bridger Aerospace Group Holdings, Inc. Common Stock (Nasdaq: BAER), QuantaSing Group Limited American Depositary Shares (Nasdaq: QSG), AlphaVest Acquisition Corp Ordinary Shares (Nasdaq: ATMV).

Notable Equity Crowdfunding Campaigns Ending Today: N/A.

Notable Economic Events Today: Crude Oil Inventories (10:30 a.m. ET).

Texas Instruments Sees Weaker Demand

A calculator in a yellow background — Photo by Clayton Robbins / Unsplash

Texas Instruments (Nasdaq: TXN) posted mixed financial results on Tuesday, sending shares down 0.36% in after-hours trading.

Financials: Texas Instruments reported earnings of $2.13 per share and revenue of $4.67 billion; both were better than expected.

The Problem: Revenue decreased 11% year-over-year due to “weaker demand in all end markets” except for automotive.

Outlook: The company expects revenue to be between $4.17 billion to $4.53 billion in the quarter, which was below estimates.

Final Thoughts: The sales drop reflects poorly on Texas Instruments. The stock is up 1% in the past 12 months.

Intuitive Surgical Faces Covid Impact

Shares of Intuitive Surgical (Nasdaq: ISRG) dropped 9.1% in after-hours trading on Tuesday after posting disappointing financial results.

Final Thoughts: The company said it was impacted by the resurgence of COVID-19 in China.

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