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Microsoft Q1 results: All eyes on the future of AI

By Kyle Rodda

10:10, 24 October 2023

Microsoft (MSFT) will deliver its Q1 earnings after the closing bell on Tuesday. We preview what the markets are expecting heading into the results.

What are analysts forecasting for Microsoft’s Q1 results?

 RevenueEPSCloud Revenue2Q EPS Guidance
Estimate$54.54B (8.8%)$2.65 (13.1%)$23.6B (16.15%)$2.66

(Source: Bloomberg)

According to data sourced by Bloomberg, analysts predict Microsoft will deliver a robust set of Q1 results. Revenues are forecast to climb 8.8% to $54.54B for the quarter, to drive a 13.1% increase in EPS to $2.65. Microsoft’s Azure cloud platform is expected to remain the main driver of Microsoft’s growth, with analysts projecting revenues for the business segment to rise 16.15% to $23.6B.

Investors will probably focus more on the qualitative information from Microsoft’s results. Microsoft is making sizable investments to drive AI integration into its products, especially its Azure platform. ]According to the same Bloomberg data, estimates for Azure revenues haven’t shifted through this period of AI mania; investors are likely to search for information about when it may translate into higher revenues and what capital expenditure will be required to get there.

Bloomberg data suggests analysts  forecast Q2 earnings per share guidance to be mainly in line with Q1 at $2.61. However, that would represent 16% earnings growth.

Broker recommendations and consensus price target

NVDA

468.27 Price
+0.390% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 0.19

TSLA

238.68 Price
+1.690% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 0.11

COIN

133.59 Price
+7.420% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 0.15

GME

15.21 Price
+4.940% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 0.13
BuyHoldSellConsensus Price Target
5660$397.56

Analysts remain overwhelmingly bullish on Microsoft’s stock. According to Bloomberg surveys, 56 brokers favour buying the stock, six suggest holding, and none call for a sell. The consensus price target is also at a meaningful premium to market value at $397.56.

Microsoft share price: technical analysis

Microsoft’s technicals look constructive, with the stock in a primary uptrend. After hitting all-time highs in July, the share price has pulled back in what currently looks like consolidation. 

Going into results, the option implied 1-day move is approximately 4%.

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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