Let’s be brief about it, then.

The mega-tech of the hour in Australia, Microsoft  (MSFT) enjoyed a more than +4% upward swish in after hours trade in New York following stronger-than-expected numbers for MSFT’s Q1.

Meanwhile, Google-daddy Alphabet (GOOGL) crossed the streams at circa -6.4% with its touted cloud business disappointing market forecasts, despite beats across both revenue and earnings.

It was Microsoft’s Azure cloud segment, which built the best of its gains, some important trader telling CNBC TV damn early this morning that he was ‘particularly optimistic on the company’s revenue growth’ out of its growing, prettily named cloud segment.

But, at last, the major American averages all produced wins overnight thanks to the variety of strong corporate earnings which many hoped might come to the rescue.

The Dow added more than 200 points, or 0.6%, to break a four-day losing streak. The S&P 500 and Nasdaq Composite gained 0.7% and 0.9%, respectively.
 

Microsoft (MSFT) ($US)

Wall Street expected: MSFT to earn $2.52 per share (EPS) on revenue of $51.72bn Vs Q3 22 when EPS was US$2.35 per share and revenue US$49.61bn.

The software giant dropped September quarter revenue of $56.5 billion, up 13% from a year ago, and well ahead of those Wall Street estimates.

Profits were $2.99 a share, well ahead of the consensus of $2.65 a share.

MSFT’s Azure cloud business grew 28% on a constant currency basis in the quarter, well above the company’s forecast for growth of 25% to 26%; on a GAAP basis Azure grew 29%. The company said Microsoft Cloud revenue was $31.8 billion, up 24%.

Microsoft shares were up 4.1% in late trading following the report.

Microsoft clocked a new all-time high (of US$366.21 in July). Currently circa US$335, the shares have pared back gains sure, but remain up some 36% year to date.

And that’s after a -10% walk-back over the past three months. Bill’s software and cloud giant have been a top pick among among investors, thanks to the company’s multi-year, multi-billion dollar investment in ChatGPT developer OpenAI. Microsoft had made no secret that AI would be a key source of its future growth.

Microsoft CFO Amy Hood said its Intelligent Cloud segment, which includes Azure, had revenue of $24.3 billion, up 19%, and well ahead of its forecasted range of $23.3 billion to $23.6 billion. Server products and cloud services revenue was up 21%.
 

Alphabet Inc. (GOOGL) ($US)

The internet services company’s cloud unit revenue growth slowed to 22.5% in the third quarter, from 28% in the previous three months. That was an economic slowdown thing – where GOOGL says company cut the big spending on cloud-related services – including those expensive AI tools.

While advertising spending has been strong in some sectors such as retail and travel, Wall St analysts highlighted a notable constraint in mega tech budgets, and that clocked Alphabet’s really key revenue source.

Alphabet sucked up ad revenue of $59.65 billion for Q3, compared with $54.48 billion a year earlier. It also reported a net profit of $19.69 billion for the same period, vs the measly $13.91 billion a year earlier.

Tough times.

Earnings per share (EPS) came in at $1.55 per share vs. $1.45 per share consensus on the street.
 

Loopy

Before Wall Street’s overnight Tuesday session it’s been nothing but a loopy week in the States.

The S&P 500 lost -2.2%, the Dow Jones gave away -1.6% and the tech heavy was Elon’d lower to the tune of -3%.

The blistering surge in US treasury yields remains a scarier idea than the wars, plagues, pestilence and famine that has resulted in such unwelcome recent  Wall St bearishness.

The loopy surge in US treasuries has caused an equal surge in market loopiness as traders reckoned – for the umpteenth time this year – of fresh potential weaknesses and/or strengths in the US economy and sent Wall Street indices back to September.

But it does seem investors are as sick of playing this game as we are of watching it. No risk-taking apparent now. Not in terms of the Fed’s decisions regarding interest rates, and the tone is far more hawkish in the hearts and minds than just in the mouths of the fedspeakers who were at it in full throat last week.

The chances of a rate rise at the November policy meeting is suddenly as likely as that dove Wall Street’s been imagining is tucked up the sleeve of J Powell this whole time.

The question is, now broad expectations are for the raptor, will the chair produce the dove – just to keep everyone busy – which is better than panicking?

The yield on the benchmark 10-year Treasury crossed 5% – a level it has not reached since 2007 just before the credit crisis. The 5% yield could pressure the economy as it could impact mortgage loans, auto loans and credit cards by raising rates.

A continued bond-market rout sends Treasury yields – which are inverted (ie: move opposite direction to price) – soaring away and on Monday the 10-year yield did punch through the 5% threshold.

The quick, brown rise in yields has jumped the lazy dog and Wall St equity investors are recalibrating their expectations and allocations between financial assets.

Making a wee bit of history, earlier this week too: the US 30-year fixed mortgage rate, which is at 8%. It hurts to read. And is a level not seen since, well,  before George W Bush.

Which in a world of rise is why the 5% yield on US treasuries could be seen as a pretty damn, sexy and appealing alternative to shonky and unreliable equities and stocks.

And it appears punters were ready to make that call late last week in Yonkers, with all two major benchmarks sliding as doubts increased that the Federal Reserve won’t go the full raptor on rates vs rising inflation.

On Friday, the Dow Jones lost -0.9%, as Messrs Apple (AAPL), Microsoft (MSFT), IBM (IBM), Nike (NKE) and a whole gaggle of big-ass blue-chip names fell – this one for example –

American Express (AXP)…

Via Google Finance

…fell to circa 5% to US$144.59.

While the credit card issuer reported earnings that beat Wall Street expectations, its quarterly revenue was underwhelming, while non-interest revenue missed consensus estimates.

The S&P 500 suffered its first weekly loss in the past three weeks.

Despite a strong performance by Netflix (NFLX), the Tech Sector wandered off on Friday, leaving the tech-heavy Nasdaq down -1.5%,  pressured by serious losses for Tesla (TSLA), which fell after a glum Q3 earnings results.
 

Elon Watch

Elon’s EV maker reported adjusted earnings of 66 US cents per share vs the 73 US cents expected.

Musk said he wants his company to make its cars for everyone (ie: cheaper), while banging on as well about the crap Fed, weaker companies and the crap global economy.

Tesla ended the week more than 15% lower, suffering its worst week since December 2022.

This week is also the 1st anniversary of Elon’s ill-advised $US44bn acquisition of the social media platform formerly known as Twitter, now renamed X in July this year for the majority of internet users who prefer to use the keyboard once, briefly, instead of seven times.

 

More Mega Earnings this Week

Meta Platforms (META) ($US)

Reporting after the close tonight, Wall Street expects the Facebook-daddy to earn $3.45 per share on revenue of $31.85 billion. This compares to the year-ago quarter when earnings were $1.64 per share on revenue of $27.71 billion.

What to watch: Amid the recent decline in tech stocks, Meta stock has maintained its strong standing among mega-cap performers. Its shares have risen more than 40% over the past six months, crushing the 2% rise in the S&P 500 index.

With its meagre +1.5% gain over the last 30 sessions, META stock is still a laughing factory – up beyond 150% year to date – comparatively dreamlike to the 10% rise in the S&P 500 index.

That’s momentum. But investors will want more of it and bring the high expectations to work.

Mata management has wrung the towel on cash cutting initiatives, delivering lower cost guidance twice this year.

These initiatives not only puts the company in a much stronger financial standing in the near term, but for the longer-term future. In Q2 revenue jumped 11% YoY, adjusted EPS, up from $2.46 to $2.98.

During the quarter, gross margin remained steady above 81% with the operating margin expanding from 29% to almost 32% which powered the cash flow from operations to surge by almost 50%. These are fundamental improvements and worthy of note considering Meta has also begun to flex its growth muscle within its core digital advertising business.

Amazon (AMZN) ($US) 

Reports after the close, Thursday, Oct 26. Wall Street expects Amazon to earn 55 cents per share on revenue of $134.21 billion. This compares to the year-ago when earnings were 28 cents per share on revenue of $127.1 billion.

With a gain of well over 50% this year, AMZN is still among the mega-cap brethren’s top-performers.

And this, despite a -7% slide over the past month. Bezos’ e-shopping giant’s growth and efficiency strategies – like Meta’s – have been what the doc ordered after previous perceived flagrance.

Last quarter, Amazon profits climbed across almost all segments.

Almost all… AWS, copped rising expenses, but what a segment.

The last three months have seen AMZN lift everywhere – not just revenue and earnings – but operating cash flow, EBITDA and net profits.

After a humiliating $625 million North American loss in Q2 22, AMZN swung utterly madly to a $3.2bn profit last quarter.

These bottom line increases were driven by a combination of high-margin advertising revenue and higher unit sales which helped the company spread its fixed costs across a greater volume of revenue.

Amazon now has a sleek cost profile, but a toppy valuation – shares are 50% more expensive than they were at Xmas time.

But one is told to keep the eye on a co’s long-term earnings potential, so watch out for the incoming profit guidance for a consistent investment outlook/return.
 

What’s Left This Week In America

 

Wednesday

US: New home sales

Earnings: Boeing Q3, Carrefour Q3, Cazoo Q3, Chubb Q3, Dassault Systèmes Q3, Deutsche Bank Q3, Fresnillo Q3 production report, Heineken Q3, Hilton Worldwide Holdings Q3, IBM Q3, Lloyds Banking Group Q3 management statement, Mattel Q3, Meta Q3, Moody’s Q3, Porsche Q3, Western Union Q3, Wyndham Hotels & Resorts Q3

Thursday

Bank of England’s Jon Cunliffe to speak in Washington

European Central Bank monthly interest rate decision

US: Flash Q3 GDP data

Results: Accor Q3, Amazon.com Q3, Bank of Ireland Q3 trading update, Bloomsbury Publishing H1, BNP Paribas Q3, Bristol Myers Squibb Q3, Capital One Q3, Comcast Q3, Danone Q3, Ford Motor Company Q3, Fujitsu H1, Harley-Davidson Q3, Hasbro Q3, Heathrow Q3, HelloFresh Q3, Hershey Q3, Intel Q3, Juniper Networks Q3, Kerry Group Q3, Mastercard Q3, Mercedes-Benz Q3, Merck Q3, Northrop Grumman Q3, Reliance Steel & Aluminium Q3, Royal Caribbean Q3, Sodexo FY, Southwest Airlines Q3, Standard Chartered Q3, STMicroelectronics Q3, Unilever Q3, United Parcel Service Q3, Universal Health Services Q3, Universal Music Group Q3, Vinci Q3, Volkswagen Q3, Volvo Q3 

Friday

First anniversary of Elon Musk completing the acquisition of the social media platform Twitter, renamed X in July this year

Japan: October trade figures

US: Uni of Michigan consumer confidence index

Results: Air France-KLM Q3, Chevron Q3, Colgate-Palmolive Q3, Danske Bank Q3, Electrolux Q3, Eni Q3, ExxonMobil Q3, Holcim Q3, Hitachi Q2, IAG Q3, NatWest Group Q3, Nomura Q2, Rémy Cointreau H1, Stanley Black & Decker Q3, T Rowe Price Q3