Microsoft Set for Second-Quarter Earnings Report amid Mixed Market Reactions
Redmond, Washington-based Microsoft Corporation (MSFT) stands as one of the leading software companies globally. Commanding a significant portion of the PC software market, it holds over 80% market share in operating systems and offers a range of top-tier business and productivity software. With a market cap of $3.1 trillion, Microsoft employs 228,000 staff members and operates in more than 190 countries worldwide.
Anticipations for Upcoming Earnings
Microsoft is set to disclose its second-quarter earnings on Tuesday, Feb. 4. Analysts predict the company will report earnings of $3.13 per share, which marks a 6.8% increase from last year’s $2.93 per share. Impressively, Microsoft has outperformed Wall Street’s profit expectations for four consecutive quarters. In its most recent reporting period, the company achieved an EPS of $3.30, reflecting a 10.4% year-over-year increase and surpassing estimates by 7.1%.
Future Earnings Outlook
Looking towards fiscal 2025, analysts project Microsoft to report an EPS of $12.92, which signifies a 9.5% rise from fiscal 2024’s $11.80. Predictions for fiscal 2026 are even more optimistic, as earnings are expected to jump by 14.2% to reach $14.76 per share.
Stock Performance Compared to Market
Over the past 52 weeks, MSFT’s stock price has risen by 13.3%. However, this performance falls short compared to the S&P 500 Index’s 24.2% rise and the Technology Select Sector SPDR Fund’s (XLK) 23.9% returns during the same period.
Market Reactions Following Q1 Results
Despite exceeding expectations for earnings and revenue, Microsoft’s stock dropped by 6.1% during trading after its Q1 results were released on Oct. 30. The company reported a striking 16% increase in total revenues to $65.6 billion, accompanied by a 10.7% rise in net income to $24.7 billion, resulting in a record EPS of $3.30.
However, guidance for the upcoming quarter did not align with market predictions. Microsoft anticipates Azure’s revenue growth in Q2 to be between 31% and 32%, which is a decrease from 34% in Q1. Additionally, the Intelligent Cloud segment is expected to grow by 18% to 20%, down from 21%. The company also expects a negative $1.5 billion in other income and expenses due to projected losses from OpenAI. These updates led to notable unrest among investors.
Analysts Remain Optimistic
Despite the recent turmoil, analysts maintain a positive outlook on Microsoft’s long-term prospects. The stock carries a consensus “Strong Buy” rating. Out of 41 analysts tracking Microsoft, 34 recommend a “Strong Buy,” with four suggesting a “Moderate Buy” and three advising a “Hold.” The average price target of $508.31 indicates a potential upside of 19.7% from current price levels.
On the date of publication, Aditya Sarawgi did not hold (either directly or indirectly) any positions in the securities mentioned in this article. All information and data provided are strictly for informational purposes. For more details, please refer to the Barchart Disclosure Policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views and opinions of Nasdaq, Inc.
