Microsoft Stock News and Forecast: Are MSFT earnings good enough for a market bounce?


  • MSFT released earnings after the close on Tuesday.
  • Microsoft beat on top and bottom lines as cloud services were strong.
  • Tech earnings could turn the bearish tide, but we need Fed meeting out of the way first.

Microsoft (MSFT) released earnings last night after the close, and they were thankfully positive. Thankfully, since the big tech earnings releases could stem the bearish tide currently sweeping all equities before it. First, investors need the Fed meeting out of the way, and that happens this afternoon.

Tesla and Apple are also up this week. If those two can surprise to the upside as well, the trio will certainly make a powerful case for stemming the losses. We are assuming though that all goes smoothly with the Fed. We base that assumption on its track record of guiding markets and the fact that it has already caused this sell-off by taking a more hawkish approach. The Fed will have realized this correction was long overdue and healthy as bubble conditions were forming everywhere. 

Microsoft Stock News

Now back to the matter at hand. Microsoft beat on both top and bottom lines. Earnings per share (EPS) came in at $2.48, beating the $2.31 estimate. Sales or revenue came in at $51.7 billion, ahead of the $50.88 billion estimate. The reaction was somewhat muted on the numbers as MSFT shares actually ticked a decent bit lower, down 4% afterhours. This was due to a combination of risk aversion and mostly the lack of outlook provided by the company. This was surprising as cloud services income rose sharply and other business areas also produced strong growth. Once the conference call began, however, things picked up.

Microsoft gave a strong outlook for the next quarter. Revenue was guided at $48.9 billion at the midpoint, which is ahead of previous analyst forecasts for $48.11 billion. In particular Microsoft sees cloud revenue of up to $19 billion for Q3. This led to a sharp turnaround in the stock. From being down 4%, it rallied up 3% on the guidance. 

Microsoft Stock Forecast

This is good news in our view. What transpired was a poor initial reaction due to a lack of guidance despite strong earnings numbers. The outlook turned things around, and this can continue once the Fed-induced risk aversion is over with. There is nothing to beat the stock up with that we can see. MSFT provided a strong earnings and strong outlook. Buybacks and dividend payouts also rose last year. This could in fact help turn the tide of sentiment across the broad equity space. So far, earnings season has been a disappointment.

We had already picked up on the potential double bottom, and we note yet again how MSFT spiked down to $277 on the earnings release. This was the spike low from the huge sell-off on Monday when the NASDAQ was down 5% before the massive turnaround. Microsoft again found quick and decisive buyers at this level and was unable to print much volume below $280. This puts in a strong bullish double bottom so long as $280 holds. We see no reason for it not to. The 200-day moving average at $293 will be the first target and then $318. 

Microsoft (MSFT) chart, daily

 


Like this article? Help us with some feedback by answering this survey:

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD stabilizes near 1.0550, looks to post weekly gains

EUR/USD stabilizes near 1.0550, looks to post weekly gains

EUR/USD continues to fluctuate in a tight channel at around 1.0550 in the American session on Friday as trading action remains subdued with US financial markets heading into the weekend early. The pair looks to end the week in positive territory.

EUR/USD News
GBP/USD loses traction, retreats below 1.2700

GBP/USD loses traction, retreats below 1.2700

After climbing to its highest level in over two weeks at 1.2750, GBP/USD reverses direction and declines to the 1.2700 area on Friday. In the absence of fundamental drivers, investors refrain from taking large positions. Nevertheless, the pair looks to snap an eight-week losing streak.

GBP/USD News
Gold pulls away from daily highs, holds near $2,650

Gold pulls away from daily highs, holds near $2,650

Gold retreats from the daily high it set above $2,660 but manages to stay afloat in positive territory at around $2,650, with the benchmark 10-year US Treasury bond yield losing more than 1% on the day. Despite Friday's rebound, XAU/USD is set to register losses for the week.

Gold News
Bitcoin attempts for the $100K mark

Bitcoin attempts for the $100K mark

Bitcoin (BTC) price extends its recovery and nears the $100K mark on Friday after facing a healthy correction this week. Ethereum (ETH) and Ripple (XRP) closed above their key resistance levels, indicating a rally in the upcoming days.

Read more
Eurozone PMI sounds the alarm about growth once more

Eurozone PMI sounds the alarm about growth once more

The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures