What’s next for Microsoft stock ahead of fourth quarter results

When will Microsoft release its fourth quarter earnings?

Microsoft is expected to release its fourth quarter results covering the three months ending at the end of June after U.S. markets close on Tuesday, July 26. The company plans to hold a conference call at 2:30 p.m. PT or 5:30 p.m. ET.

Microsoft’s fourth-quarter earnings consensus

Wall Street thinks Microsoft will post a 13.8% increase in fourth-quarter revenue to $52.5 billion and expects diluted EPS to rise 5.9% from a year ago to 2.30 dollars.

If Microsoft meets expectations last quarter, it’s on track to post an 18.6% increase in annual revenue to $199.3 billion and a 19.2% jump in EPS to 9 $.50.

Overview of Microsoft’s fourth quarter results

Microsoft is expected to outperform most of its Big Tech rivals this quarter. Only Alphabet should generate stronger growth in what has proven to be a particularly difficult period for most.

Microsoft’s revenue is expected to rise on rising sales across the board for its digital products and services, while profits are expected to rise as higher profits from its cloud computing and software offset a decline in its division. material. However, rising costs mean that overall earnings growth will continue to lag sales.

It’s worth noting that Microsoft is expected to increase both revenue and earnings despite tough comparisons to the prior year, when profits rose more than 48% as demand for technology soared in arrow during the pandemic. The strength of the US dollar can also be expected to weigh on results as many multinationals temper expectations. Microsoft makes more than half of its sales outside the United States.

Its cloud computing division is expected to see the strongest growth this quarter thanks to increased demand for the likes of Azure. Its Productivity and Business Processes unit, which includes its Office software and subscriptions, Dynamics 365 solutions and LinkedIn social media platform, is also expected to see strong double-digit growth. The sweetness will come from More Personal Computing, which is responsible for selling Microsoft’s range of hardware, from Xbox game consoles to Surface PCs, as well as licensing its popular Windows operating system, as demand for hardware decreases.

Below is a look at what to expect in terms of revenue and earnings from each division for the fourth quarter and the full year, according to the latest consensus figures from Bloomberg:

Wall Street is confident Microsoft can deliver another year of double-digit growth in fiscal 2023, with 14% revenue growth and a 12% EPS increase. The outlook will be key in setting expectations for the new year, which is plagued by runaway inflation and weaker growth prospects. Although some aspects of Microsoft’s business could suffer in an economic downturn, particularly for hardware, analysts remain optimistic that the majority is well protected as demand for vital products and services like Azure, Dynamics 365, Windows and its Office software should continue. even if the environment deteriorates. Microsoft also has the ability to use its more than $100 billion cash balance to repurchase stock and help bolster its EPS and offset any weakness in the future.

What’s next for MSFT stocks?

Microsoft shares are down 23% since peaking in late 2021, but have shown signs of consolidation since hitting a 13-month low of $241.50 in May, after been capped by a high of $268.40 over the past five weeks.

The stock is up 4.8% over the past six trading sessions, raising hopes that a bullish trend may be on the cards and the results may provide the necessary catalyst. It needs to break above $268.40 before it can target $275, which is the 100-day moving average. Beyond that, it may seem to climb towards $290. The 52 brokers who cover Microsoft are extremely bullish, with all but three believing the stock offers a buying opportunity after this year’s strong sell-off. The average target price sits at $345.50, implying more than 30% upside potential over the next 12 months.

We could see Microsoft stocks come under renewed pressure if the current high holds. Notably, average trading volumes have seen a slight decline over the past five days, suggesting that the recent uptick may not pick up momentum – although we may see a spike in interest following the earnings release. . The hope for investors is that if the stock goes down, the next low will be higher than the last low at $250 to show that an uptrend is still in play, but we could see stocks back towards the bottom. 13 months if it falls below this level.

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