Alphabet, the parent company of Google, is set to release its third-quarter earnings. Analysts expect
- Earnings of $1.45 per share
- Revenue of $75.97 billion.
The revenue estimates mark a return to double-digit revenue growth after four quarters of single-digit expansion. Google's core advertising had weakened due to economic softening and increased competition from TikTok.
During the quarter, Google implemented focused layoffs in various business areas and continued to invest heavily in artificial intelligence (AI). It aims to integrate generative AI technology into more products, potentially impacting its search and advertising business. The company also underwent significant leadership changes, including the departure of its finance chief Ruth Porat. It is also facing an antitrust trial initiated by the Department of Justice.
The last earnings on July 25 beat expectations with earnings coming in at $1.44 versus $1.34 expected. Revenues also be coming in at 74.604 billion versus $72.854 billion expected. The price moved from a closing level $121.02 on July 25. To a close on July 25 at $129.27. The price low since the last release was at $126.38. At high price reached $141.22 on October 12.
Alphabet's all-time high price reached $151.55 back on February 2, 2022.
Looking at the hourly chart below, the price is back above its 100-hour moving average at $137.85 after testing its 50% midpoint of the move up from the September 23 low at $134.22 on Monday.
Today, a move back below the 100-hour moving average would have traders targeting the 200-hour moving average at $135.62. Moving back below each would tilt the bias back to the downside from a technical perspective. Get below 50% and the sellers are in even more control.
Microsoft will also report earnings after the close with a strong performance anticipated due to its leadership position in AI, backed by a multi-year, multi-billion dollar investment in OpenAI, the developer of ChatGPT.
For the quarter ending in September, Microsoft is expected to report
- EPS of $2.52 per share
- Revenue of $51.72 billion.
In the quarter, Microsoft unveiled Microsoft 365 Copilot, an AI-powered version of its productivity platform, further emphasizing its commitment to AI-driven growth. Citigroup analysts anticipate accelerating total revenue and profitability for Microsoft, citing stabilization in IT budgets and increased revenue related to generative artificial intelligence. The Azure cloud platform and Microsoft 365 Copilot are expected to drive growth, potentially adding $9 billion to Microsoft's fiscal 2025 revenue.
Analysts are keen to see the company's guidance and management's confidence in this growth potential. The company's $10 billion investment in OpenAI is seen as a game-changer, as AI is expected to boost Microsoft's market share among enterprise customers.
Technically, looking at its hourly chart, the prices trading near its cluster of hourly moving averages. The 200-hour moving averages at $324 and the $0.02. It's 100-hour moving averages at $328.55, and its 50-hour moving average is at $330.87. The current price is trading at $329.56 which is within the low and high of those moving averages. So the market is sitting at a neutral level technically and waiting for the next shove.
The high price for the year reached up at $366.77. The most recent low extended to a low price on September 28 at $309.88. That got within $1.48 of its 38.2% retracement of the move up from the November 2022 low at $213.98. Holding the 38.2% was a positive from a technical perspective.
Since the last earnings on July 25 when earnings-per-share came in at $2.69 versus $2.55 estimate, and revenues came in higher at $56.189 billion versus $55.485 billion estimate, the price has moved from $350.98 (the close on the day of the last earnings), to a low reached on September 28 at $309.45. The high price since the last earnings reached $340.86.
So all of the price action has been below the closing level from the last earnings day despite the beat on the top and bottom lines. Hmmmm
The current price is near the MAs and near the midpoint of the range from $350 to $309. Clearly, the market is in neutral area. Who knows what the earnings will be, but it is time to get up and move (not too surprising).
