Microsoft and Texas Instruments beat quarterly profits

The fourth quarter earnings season is underway and the markets are behaving rather… agnostically. For the second day in a row, the four major indexes are hovering around a zero balance – keeping the overall strong January intact even as earnings reports from some of the biggest corporations facing the biggest challenges highlight the challenges facing their businesses. The Dow rose +0.33% that day, the S&P 500 -0.07%, the Nasdaq -0.26%, and the small-cap Russell 2000 -0.24%.

The most important report came out after the close today: fiscal second quarter for Microsoft’s MSFT saw earnings increase 5 cents to $2.32 per share (though still -8% compared to the year-ago quarter). Revenues of $52.75 billion for the quarter were just below the Zacks Consensus Estimate of $52.93 billion. The stock was up +4% in late trading on the news, after being one of the stocks unchanged last week.

The Azure cloud segment slightly exceeded expectations: +30.8% in the quarter compared to the expected +30.6%. That said, the company’s cloud business is clearly slowing as enterprise customers look for ways to cut costs in the current inflationary environment. During the conference call, we expect to discuss Microsoft’s reported $10 billion for Open AI, which includes the highly popular ChatGPT, as well as the company’s solutions to improve margins in the cloud.

Microsoft has an excellent track record of beating profits. True, it suffered a loss in the fourth quarter of last year, but its previous negative earnings surprise was back in 2016. This leading Big Tech play proves every quarter that it knows how to keep its segments in suspense – and now is proving that it can do this even in bleak economic times, a reminder Netflix NFLX impressive quarterly report for last week.

Texas Instruments, Texas delivered even stronger quarterly results after today’s closing bell, with better and better results in the fourth quarter. Earnings of $2.13 per share on $4.67 billion topped the Zacks Consensus Estimate of $1.96 per share and $4.56 billion in sales. Shares jumped after hours; perhaps the teleconference will also help increase these stocks. Since the beginning of the year, the price of TXN has increased by +8.5%.

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