Microsoft post-earnings performance: how earnings reboot share prices

(AI summary)

Microsoft earnings: no bugs, just big moves

Microsoft Corporation is one of the largest technology companies in the world, known for its flagship products like Windows, Office, and Azure cloud services. As a tech giant, its earnings reports are closely watched by investors, often triggering significant share price movements.

Microsoft is scheduled to report its first quarter (Q1) earnings for 2025 on Wednesday, 31 October 2024 at 6.10am AEDT. This article provides valuable insights into how the market responds to the company’s financial results across various timeframes.

The following drivers will be in focus:

• Cloud services growth
• Artificial intelligence (AI) Development
• Gaming and Xbox performance
• Guidance and outlook

Key financials

Expectations for Q1 2025

• Revenue: $64.48 billion
• Revenue growth: 14.12 year-on-year (YoY)
• Earnings per share (EPS): $3.11

Comparison to previous quarter

• Revenue: $64.73 billion
• Net income: $22.00 billion
• EPS: $2.95

Post earnings performance analysis

• Immediate reactions (one day)

After the second quarter (Q2) 2023 report (25 July 2023), Microsoft's stock fell by -3.8% in a single day, reflecting a negative market reaction. However, other quarters, such as Q1 of 2023 and the third quarter (Q3) 2023, saw positive gains of up to +8%, signalling strong investor confidence. These immediate changes often reflect how well the earnings report met expectations.

• Short-term adjustments (one week)

One week post-earnings, the stock showed further volatility. After Q2 2023, Microsoft’s share price declined by -4.2%, while Q1 2023 saw a +12% gain. Short-term sentiment can amplify or reverse initial reactions depending on market analysis and external factors.

• Medium-term trends (one month)

A month after earnings, more significant trends emerge. Following Q2 2023, Microsoft’s stock dropped by -8.1%, pointing to ongoing concerns. By contrast, Q1 2023 recorded +15% gains, reflecting continued investor optimism.

• Overall patterns

The data shows high volatility after Q1 and Q3 earnings, with notable positive movements, while Q2 tends to result in more negative adjustments. Investor reactions vary based on the time of year and broader market conditions.

• Implications for investors

These patterns highlight the importance of timing and sentiment during earnings season. Short-term traders might focus on immediate fluctuations, while long-term investors may consider how earnings align with Microsoft’s strategic outlook. Understanding these movements can inform investment strategies, especially around earnings announcements.

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Microsoft's post-earnings performance chart