- 3 Big Scoops
- Posts
- đź—ž Microsoft Tanks On Lower Cloud Sales
In partnership with
Bulls, Bitcoin, & Beyond
Market Moves Yesterday
S&P 500 @ 5,436.44 ( ⬇️ 0.50%)
Nasdaq Composite @ 17,147.42 ( ⬇️ 1.28%)
Bitcoin @ $65,664.70 ( ⬇️ 0.76%)
Hey Scoopers,
Welcome to Wednesday, a mid-week milestone achieved. Here are our stories for the day!
👉 Microsoft stock slumps
👉 AMD surprises Wall Street
👉 Ethereum ETFs wrestle with outflows
So, let’s go 🚀
Market Wrap 📉
Equity indices dragged lower, led by declines in mega-cap tech stocks as investors brace for quarterly reports from names in this cohort. Traders are also awaiting the Fed’s next move in its latest policy meeting.
Market bellwether Nvidia pulled back by 7%, while Amazon, Netflix, and Meta Platforms also reported declines.
The earnings season has been quite solid until now. Around 50% of the S&P 500 names have reported Q2 earnings, 80% of which have surpassed consensus estimates.
The market is seeing a broadening of earnings growth. Alternatively, as the bar for tech earnings is quite high, any indications of a slowdown in AI-related spending could see a pullback in valuations.
Moreover, the soft landing narrative remains intact, which means a potential rate cut from central banks coupled with moderating inflation could push equity indices higher.
This morning, traders will monitor economic data on private payrolls, employment costs, and pending home sales. Elsewhere, companies such as Boeing, Albemarle, Qualcomm, and Etsy will report quarterly results.
Trending Stocks 🔥
Merck - Shares dropped 9.8% as weaker-than-expected guidance overshadowed a strong Q2 report.
Procter & Gamble - The consumer giant lost close to 5% after its Q2 sales missed estimates due to disappointing demand in China.
Pinterest - The image-sharing service fell 11% in pre-market after it issued disappointing guidance for Q3 of 2024.
Microsoft Stock Moves Lower
Microsoft shares are down close to 3% in pre-market at the time of writing as investors looked past its earnings beat and focused on cloud sales that missed consensus estimates.
In fiscal Q4 of 2024 (ended in June), Microsoft reported:
👉 Revenue of $64.73 billion vs. estimates of $64.39 billion
👉 Earnings per share of $2.95 vs. estimates of $2.93
Microsoft’s sales rose by 15% year over year, and it expects the top line to expand by roughly 14% in fiscal Q1, given revenue is forecast between $63.8 billion and $64.8 billion, below estimates of $65.24 billion.
Microsoft’s Intelligent Cloud segment generated revenue of $28.5 billion, up 19% but below estimates of $28.68 billion. Here are some key numbers for the tech giant:
GitHub ended fiscal 2024 with an annual run rate of over $2 billion
Azure's sales increased by 29%, below analyst estimates of 31%. This was the first time since 2022 that Azure had fallen short of estimates.
Of the 29% growth for Azure, around eight percentage points came from AI services.
Microsoft’s cloud business is battling with Amazon Web Services and Google for artificial intelligence workloads. All three companies are investing heavily to boost AI capabilities as generative AI platforms continue to expand rapidly.
AMD Doubles Data Center Sales
Shares of semiconductor giant Advanced Micro Devices are up 7.7% in pre-market after it reported Q2 results with:
👉 Revenue of $5.84 billion vs. estimates of $5.72 billion
👉 Earnings per share of $0.69 vs. estimates of $0.68
In Q23, AMD forecasts sales of $6.7 billion, higher than consensus estimates of $6.61 billion.
AMD shares have trailed the broader markets in 2024 despite the chip maker being the second largest vendor of data center graphics processing units (GPUs) after Nvidia.
Investors expect AMD to take market share away from Nivida with its MI300X AI chip and drive data center sales higher. In the June quarter, AI chip sales exceeded $1 billion, and AMD expects data center GPU revenue to exceed $4.5 billion in 2024, up from its earlier forecast of $4 billion.
AMD’s AI chip sales in Q2 more than doubled to $2.8 billion in Q2 due to an increase in AI GPU shipments.
AMD’s core business is making central processors for laptops and servers. Sales in its Client business segment rose 49% to $1.5 billion, while gaming segment sales fell 59% to $648 million.
Track Company Earnings Like a Pro
Earnings Hub is designed for investors to give you everything you want to know about company earnings, including:
An Earnings Calendar
Expectations & Actuals
Listen to Earnings Calls Live (or replay)
Earnings Call Transcripts & AI Summaries
Realtime News on your favorite stocks
Alerts delivered via Text or Email
Most of the features are FREE! Premium features are 50% off right now at just $49 for an entire year.
Ethereum ETF Inflows Are Under Pressure
A report from JPMorgan stated that new ether exchange-traded funds (ETFs) saw net negative flows during their first week on the market.
The investment firm said net flows to the fund totaled $440.3 million. The negative number is tied to the $1.7 billion that has left the Grayscale Ethereum ETF, which has the highest management fee among spot ETFs.
If we exclude the Grayscale product, ETFs have attracted $1.3 billion, with BlackRock leading the way with $500 million.
Ethereum is the second-largest cryptocurrency in the world, and prices have surged 77% in the last 12 months.
Headlines You Can't Miss!
Bank of Japan raises benchmark interest rates
First Solar tops estimates in Q2
Samsung crushes Q2 estimates amid strong AI demand
Starbucks gains over 3% despite revenue and earnings miss
DraftKings kills NFT business
Chart of The Day
The S&P 500 index consists of 11 primary sectors, including information technology, financials, energy, and others.
The information technology sector accounts for a third of the index, while financials make up 12.4%.
Communications services is the most concentrated sector, with the top 10 companies accounting for 97% of the total market cap. Alphabet is the largest holding in this sector and makes up 26% of the total market cap.
The S&P 500 index has also seen record levels of concentration, with the 10 largest stock accounting for a third of the index’s market value.
Among individual stocks, Amazon makes up the greatest share of the consumer discretionary sector, accounting for 39% of the total market value.
Meme of the Day
DISCLAIMER: None of this is financial advice. The newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions. Please be careful and do your own research.