This company just beat expectations all around
Microsoft’s long-awaited earnings report is officially out.
Microsoft released earnings this week, and the company easily bypassed the analyst’s expectations.
But this doesn’t come as a surprise seeing that a large number of businesses have switched to a remote model due to Covid-19. This switch has led to an uptick in demand for the company’s cloud and remote collaboration tools, which has boosted their numbers significantly.
Here’s a rundown of what we saw…
On Wednesday, the company reported $38 billion in revenue for the second quarter – up 13% from the same period in the prior year and well above the $36.5 billion. Earnings for the quarter came in at $1.46 per share, again destroying analyst’s prediction of $1.34 share.
And a further breakdown showed that the company is bringing in money from every angle. Revenue from the productivity and business processes segment was up 6% from a year ago to $11.8 billion, helped by a 19% surge in sales of Office 365 Commercial. Revenue in the intelligent cloud division was up 17% to $13.4 billion. And personal computing sales were up 14% to $12.9 billion.
Where’s the money?
These numbers are impressive – but the market didn’t react as you might expect. In fact, Microsoft’s stock fell more than 2.5% in after-hours trading following the report. And there could be a handful of reasons for this, including the concerns that Microsoft could face slowing growth in its Azure cloud business due to market leader Amazon Web services.
And many worry that with a second wave, many businesses could pull back on IT spending to help control their budget.
But here’s the thing about a second wave – business still has to run and will have to do so remotely, which leads me to believe that Microsoft will still be an integral part of the day-to-day. That’s why I’m not following the herds of worried investors. Instead, I’m looking to score big on the demand Microsoft has seen and will see in the future.
And here’s how…
How can I get some?
The question of the hour is this: when does the pandemic end?
The answer? No one knows.
Truthfully, we could be looking at a stay home economy for three months, six months, or even longer. And as long as we stay at home – remote work will remain the norm. And the need for technology to support this style of work will remain – meaning Microsoft will continue to see a boost from the current climate.
The stock has sold off from recent highs, but I feel that this sell-off creates a buying opportunity on this heavy-hitting tech stock.
So, I’m not buying into the worries that other investors seem to have. I’m calling Microsoft a buy now, and I’ll be looking to buy even more on any pullback I see.
In the Spotlight: The jobs numbers once again…
For the first time in four months, America’s jobs report didn’t paint a promising future.
After the weekly first-time claims hit their peak (sitting at 6.9 million) in the last week of March, we’ve seen a constant decline – until this week. Economists expected that claims would remain stagnant, sitting at 1.3 million.
But that wasn’t the case.
The report revealed that another 1.4 million Americans filed for first-time unemployment benefits last week. This is the first increase in initial claims in 16 weeks. As you probably know, there’s been a resurgence in infections, and many states have rolled back their reopening plans, which in turn has impacted local businesses.
These numbers paint a grim picture of the uncertainty to come for the U.S. economy – but I’ll be sure to keep you updated as we track the recovery and prepare for what’s coming next.
Don’t Lose Hope Just Yet…
While the latest numbers certainly weren’t confidence-inspiring, if there’s one thing the last several months have shown us, it’s that there’s still money to be made in this rollercoaster of a market!
You just have to know where to look… or have the tools that do the looking for you – the same way my Project 303 readers and I use my S.C.A.N. trading algorithm.
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