Alphabet and Microsoft Report Strong Numbers in Earnings Season

Last Updated: 7. November 2023By

The current reporting season shows that some companies have slowing effects due to economic headwinds. It also shows, however, that many companies are still performing well to very well operationally and presenting strong numbers. This includes the two American technology giants Alphabet (formerly Google) and Microsoft, which I will now go into in detail here in the „final bell“.

Alphabet with double-digit revenue and profit growth Google’s parent company Alphabet exceeded the forecasts with its figures. Nevertheless, there were negative analyst comments and a negative stock market reaction because some analysts did not like the revenue and profit mix. The main criticism was that the strongly growing cloud division remained below the very high expectations.

Let’s look at the numbers: Alphabet increased revenue in the last quarter by 11% to 76.7 billion US dollars. There was a big jump in profit of 40% to 19.7 billion US dollars (equivalent to $1.55 per share). Both figures were above the analyst forecasts. These expected a revenue of 75.9 billion US dollars and a profit per share of 1.45 US dollars.

While the still dominant search engine business and the video portal YouTube developed better than expected, the revenue growth of the cloud division with +22% – as already written – was below the very high expectations, which were +26%. I consider the negative stock market reaction (the share price fell from 130 to 120 euros) to be exaggerated and therefore consider the Alphabet share at the current low price to be attractive.

Microsoft: Software giant and AI beneficiary exceeds expectations The software giant Microsoft, which is also at the forefront in terms of artificial intelligence (AI), exceeded the already high expectations with its figures. The US technology company reported 2 billion US dollars more revenue than expected. 56.5 billion US dollars in revenue means an increase of 13%.

Microsoft also exceeded expectations when it came to profit. Net profit rose a strong 27% to 22.3 billion US dollars. This equates to earnings per share of $2.69. Analysts had previously expected an average of 14 cents less.

Unlike Alphabet, Microsoft was able to fully convince in the important cloud division. The Azure cloud platform recorded a revenue increase of 29%. In the future, AI is expected to be a major source of revenue and profit. Microsoft’s share price remains an interesting long-term investment for me after the recent figures, but potential new investors should wait to see if they can buy at a lower price in the event of a general weakness.