Earnings Set the Tone – Microsoft’s Earnings and What It May Mean for Tech
As the previous quarter’s earnings releases have begun, the first major tech company to drop the news has been Microsoft, which received mixed reactions that may inevitably spell bad for all big tech. Although the numbers weren’t great, they did beat analysts’ expectations, which sent the stock rising in the after-market after receding back to negative territory. The reasons as to why investors became weary rely on the company guidance made, pointing to slowing sales growth in software and cloud services. Microsoft’s sales growth for the previous quarter was the lowest they had seen in 6 years, pointing to persistently high inflation and other economic factors decreasing the demand for their services.
Microsoft executives claim that the slower paces that began in December will continue throughout the first half of the year, making investors question whether these troubling climates will be similar in other tech giants. Amazon, for instance, leads Microsoft in cloud software with their AWS platform and saw record slow revenue growth last year that may trickle throughout this year as well. As other companies find ways to limit their costs during times like these, they may begin optimizing their spending on cloud or software-related services which can hurt not only Microsoft’s sales but the sales of Amazon and Google as well. Regardless, shares of Microsoft are down 16% in the past year, which is in line with the broader tech index, the NASDAQ Composite.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
