Article by IG Market Analyst Tony Sycamore

When will Microsoft Corp report its latest earnings?

Microsoft Corp is scheduled to report its second (Q2) earnings on Tuesday, January 30th, 2024, after the market closes.

The backdrop

Investors cheered Microsoft’s first-quarter results, reported in late October, as it beat Wall Street‘s estimates and promised future product offerings infused with AI.

“With copilots, we are making the age of AI real for people and businesses everywhere,” said Satya Nadella, chairman and chief executive officer of Microsoft. “We are rapidly infusing AI across every layer of the tech stack and for every role and business process to drive productivity gains for our customers.”

Microsoft FY24 Q1 Financial Summary

Source Microsoft

Within the details, Microsoft reported the following highlights.

• Revenue from Microsoft’s Intelligent Cloud segment was $24.3 billion, up 19%. Within that, Server products and cloud services revenue increased by 21%, driven by Azure and other cloud services revenue growth of 29%.

• Revenue in Productivity and Business Processes was $18.6 billion, up 13%. Within that, Office Commercial products and cloud services revenue increased by 15%, driven by Office 365 Commercial revenue growth of 18%

• Revenue in More Personal Computing was $13.7 billion and increased 3%. Within that Windows revenue increased 5%, with Windows OEM revenue growth of 4% and Windows Commercial products and cloud services revenue growth of 8%.

What to look for in Q2?

In its Q1 earnings call, Microsoft provided the following forward-looking guidance for Q2.

Microsoft Outlook Slide.

Source Microsoft.

• During 1Q, Microsoft saw its Azure cloud revenue growth accelerate after two years of deceleration. Analysts will likely look for more of the same in its Q2 Earnings Report.

• There will be keen interest in the uptake and impact of the Microsoft 365 CoPilot AI add-on, launched last year and is available via subscription. So far, it has met with a mixed reception.

• Microsoft completed its $68.7 billion acquisition of video game publisher Activision Blizzard in mid-October. As such, it will affect earnings for Q2, and executives will likely discuss Activision Blizzard when providing guidance for Q3.

• Management thoughts and insights into the recent drama at OpenAI and any opinions on the current OpenAI board structure.

Key Financials – Summary

Wall Street’s expectations for the upcoming results are as follows.

• Earnings per share: $2.77 vs. $2.99 in Q1

• Revenue: $61.1bn billion vs. $56.52billion in Q1

Microsofts Revenue

Source Trading Economics

Technical Analysis

Building on an almost 57% gain in 2023, Microsoft’s share price has surged over 6% in the opening weeks of 2024, as investors began the new year with renewed enthusiasm for tech stocks that offer exposure to AI.

The chart of Microsoft’s share price is a textbook example of a market in an uptrend, putting in place a sequence of higher highs and higher lows punctuated by corrective and orderly pullbacks. The RSI is now pushing into overbought territory, which offers hope that a pullback may not be too far away, providing an opportunity to buy Microsoft shares at better levels.

Near-term horizontal support comes in at $380/378 and below that at $360ish, coming from July highs/ December lows. Medium-term support is strong $350/335 area, coming from the uptrend drawn from January 2023 $219.35 low and the 200-day moving average at $337.00.

Aware that a sustained break below $335 would negate the uptrend and warn a deeper pullback is underway.

Summary

Microsoft Corp is scheduled to report its second (Q2) earnings on Tuesday, January 30th, 2024, after the market closes. The price action in the lead-up to the report suggests the market is looking for both an earnings beat and positive forward guidance.