Asset Classes

Free investment financial education

Language

Multilingual content from IBKR

Close Navigation
Learn more about IBKR accounts

Alphabet Spells Success

Posted July 26, 2023 at 9:45 am
Finimize

What’s going on?

Investors gave Alphabet’s results an initial A+ on Tuesday, while Microsoft got more of a middling B grade.

What does this mean?

Microsoft’s stock has rocketed nearly 50% this year, so it’s safe to say the firm was facing some pretty lofty expectations on Tuesday. But the results, while decent-ish, didn’t exactly set the world on fire – leading to a pretty low-key initial reaction. Mind you, Microsoft did manage to clock up better-than-expected revenue growth of 10% compared to the same quarter last year, and profit also outdid forecasts, jumping 20%. Plus, the company’s crucial cloud business, Azure, grew 26% – slightly ahead of expectations, but still slower than the quarter before.

Meanwhile, Alphabet’s results were met with a standing ovation. The stars of that show were YouTube, which was back in growth mode, and Google’s own cloud business – which posted impressive growth of 28%.

Why should I care?

For markets: Azure-sky thinking.

Microsoft’s main game plan involves selling its AI-boosted software, Copilot, now with a shiny new price tag of an extra $30 per user. But some fireworks might also happen in Microsoft’s cloud business, Azure. As firms start letting AI loose, they’ll need more computing power, and that’s Azure’s cue to step in. And sure, this past quarter’s 26% growth isn’t exactly crawling – but investors will be hoping for a return to the glory days when Azure used to sprint at a pace of 35% plus.

Zooming out: Taking the temperature.

Google’s advertising revenue is a bit of a barometer for the economy. See, advertising’s a cyclical business, meaning firms splurge and starve their ad spending depending on the broader state of affairs. So with Google’s ad revenue growing again after a couple of tricky quarters – thanks in no small part to YouTube – maybe pundits will consider calling time on the US economic slowdown.

Originally Posted July 25, 2023 – Alphabet Spells Success

Join The Conversation

If you have a general question, it may already be covered in our FAQs. If you have an account-specific question or concern, please reach out to Client Services.

Leave a Reply

Disclosure: Interactive Brokers

Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Finimize and is being posted with its permission. The views expressed in this material are solely those of the author and/or Finimize and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

IBKR Campus Newsletters

This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.