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AI Industrials Stocks

Microsoft Disappoints Markets 

Microsoft (MSFT) shares fell nearly 7% in extended hours trading on Tuesday after the tech giant reported fiscal fourth-quarter results that topped expectations, but Azure growth was weaker-than-expected or simply the expectations were too high. 

For the period ending June 30, Microsoft earned $2.95 per share – above $2.93 guidance as revenue rose 15% year-over-year to come in at $64.7B – above 64.52 guidance 

Included in that was $28.52B from its Intelligent Cloud division, which consists of its Azure cloud unit. Microsoft said Azure revenue grew 29% year-over-year and 30% in constant currency. 

The company previously said it expected Azure to grow between 30% and 31% in constant currency, and some analysts previously said they expected more than 30% growth. 

Guidance for the Sep quarter will come in with the call. 

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Semiconductors Stocks

AMD Bucks The Trend – The Stock Is Up 5% 

  • Advanced Micro Devices press release (NASDAQ:AMD): Q2 Non-GAAP EPS of $0.69 beats by $0.01. 
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  • Revenue of $5.84B (+9.0% Y/Y) beats by $120M. 
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  • Record Data Center segment revenue of $2.8 billion was up 115% year-over-year primarily driven by the steep ramp of AMD Instinct™ GPU shipments, and strong growth in 4th Gen AMD EPYC™ CPU sales. Revenue increased 21% sequentially primarily driven by the strong ramp of AMD Instinct GPU shipments. 
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  • Client segment revenue was $1.5 billion, up 49% year-over-year and 9% sequentially primarily driven by sales of AMD Ryzen™ processors. 
  • Gaming segment revenue was $648 million, down 59% year-over-year and 30% sequentially primarily due to a decrease in semi-custom revenue. 
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  • For the third quarter of 2024, AMD expects revenue to be approximately $6.7 billion vs. $6.61B consensus, plus or minus $300 million. At the mid-point of the revenue range, this represents year-over-year growth of approximately 16% and sequential growth of approximately 15%. Non-GAAP gross margin is expected to be approximately 53.5%. 
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Cloud Service Providers

Microsoft (NASDAQ) Q2 Earnings Preview: AI Growth and Cloud Performance in Focus

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Microsoft (NASDAQ:MSFT) is scheduled to report its second-quarter results on Tuesday, January 30th, after market close, kicking off tech earnings.
Analysts expect a year-over-year increase in both the top and bottom lines, with earnings per share of $2.77 on revenues of $61.13 billion.

The Redmond, Washington-based company recently became the second tech giant, after Apple (AAPL), to cross the $3 trillion mark, buoyed by its artificial intelligence products. Its shares have surged nearly 63% in the last 12-months.

Microsoft (MSFT) has poured billions of dollars into OpenAI, making it the startup’s largest investor. This has let it get ahead of rivals Alphabet (GOOG)(GOOGL), Amazon.com (AMZN), and Meta Platforms (META) in the AI race.

The technology underlying OpenAI’s ChatGPT has become entwined in Microsoft (MSFT) products.

The Windows maker recently expanded access to its generative AI offering Copilot. The subscription plan is now offered to individuals and small businesses.

Copilot, which Microsoft (MSFT) dubs as an “everyday AI companion,” is intended to assist writers, programmers, creators, and designers.

According to investment firm Citi, a 5% adoption rate by its 77M customers using Microsoft 365 could add $925 million in revenue by fiscal year 2025. An adoption rate of 15% could add $2.7 billion in sales.

Analysts at Wedbush believe Microsoft (MSFT) will be the most important earnings report and conference call in all of earnings season.

The company is expected to handily beat expectations for the December quarter. Investors will be focusing on the Azure growth metric and the performance of its cloud business.

While AI be a dominant theme in 2024, analysts are of the opinion that 2025 will be the true inflection year.

Last week, Microsoft (MSFT) announced it was laying off 1,900 employees at its gaming division, primarily impacting employees at Activision Blizzard and Xbox.

Over the last three months, the company’s estimates have seen substantial upgrades. Its earnings per share estimates have been revised upwards seven times vs. one downward move, while revenue estimates have seen seven upward moves, compared to two downward revisions.

Seeking Alpha analysts at large consider MSFT a Buy. This compares with average Wall Street rating of Strong Buy and SA Quant rating of Hold.