Microsoft Stock Plunges as Cloud Growth Slows; Meta Surges on Strong Results; Apple Results on Deck

How Much Traders Expect Apple to Move After Earnings

FROM 18 minutes ago

Options trading data suggests Apple’s (AAPL) stock could move about 4% in either direction by the end of the week. A move of that size from Wednesday’s close around $256 could lift the stock to $266 at the high end, 7% off its December record, while the low end would put shares around $247.

Apple shares are currently about 11% below their early December highs reached amid positive signals about the global smartphone market and demand for the iPhone 17. The tech giant topped estimates in its last report in October, when CEO Tim Cook said Apple looked to be on track for its best-ever holiday season for iPhone sales.

Apple is seen posting record revenue of $138.11 billion, while earnings per share are projected to come in at $2.67, each up 11% year-over-year, according to Visible Alpha estimates.

Analysts at JPMorgan, UBS, and Morgan Stanley recently said that an ongoing memory chip shortage has raised some concerns about Apple’s margins, however. Though they suggested the impact on Apple may be limited, they warned solid iPhone results could potentially be overshadowed by worries about rising memory costs.

Wall Street analysts lean more bullish than bearish on Apple’s stock. Of the eight analysts with current ratings tracked by Visible Alpha, four have recommended buying the stock, compared to three neutral ratings and one “sell.” Their average price target around $291 would imply 14% upside from Wednesday’s level and is about $5 above the stock’s closing record.

–Aaron McDade

Why Microsoft Shares Are Plunging Today

FROM 33 minutes ago

Microsoft (MSFT) shares are taking a big hit after the company reported earnings yesterday.

The shares were down 12% at around $425 in recent trading, leading losses on the Dow Jones Industrial Average and the Nasdaq 100. (Read Investopedia’s full coverage of today’s trading here.)

While Microsoft’s quarterly revenue and earnings topped analysts’ estimates, worries about the tech giant’s cloud growth, coupled with its rising spending on AI and reliance on a few large customers, weighed on the shares.

Morgan Stanley analysts said that while growth from Microsoft’s Azure cloud narrowly beat the company’s guidance, it grew slower than many on Wall Street anticipated.

During the company’s earnings call, CFO Amy Hood stressed that Microsoft’s cloud growth has been held back by capacity constraints, and that Microsoft is investing in building out its AI infrastructure to meet demand, but its higher-than-expected spending has added to concerns.

Microsoft also revealed that nearly half of its backlog was attributable to OpenAI. Jefferies analyst Brent Thill said on CNBC following the results that the detail underscored worries about concentration risks and OpenAI’s ability to pay its hundreds of billions of dollars in commitments.

Still, Jefferies and Morgan Stanley said they said they see gains ahead for the shares. Though analysts’ ratings are in flux, most have bullish ratings for Microsoft, with 14 of the 15 analysts tracked by Visible Alpha calling the stock a “buy,” compared to one neutral rating. Their average price target around $598 would imply over 40% upside from the stock’s recent level.

–Aaron McDade