Microsoft reported better-than-expected financials, while Alphabet’s stock dropped due to missed ad revenue projections. Let’s dive into recent earnings reports from the pair of tech giants.
Alphabet and Microsoft kicked off Big Tech earnings season after the stock market closed on Tuesday with some wins, and some losses.
Microsoft’s recent earnings report comes after it made history last week by reaching a $3 trillion market cap, the second company to do so behind Apple. Unfortunately, the accolade was tainted by another round of layoffs that included nearly 2,000 cuts across the company’s gaming division. For Alphabet, all eyes are on the tech company’s advertising revenue, YouTube Shorts, and YouTube TV.
Let’s dive into key takeaways from Alphabet and Microsoft‘s recent earnings reports.
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Alphabet
Alphabet’s shares slipped more than 6% in after-hours trading on Tuesday after the company missed advertising revenue projections. Still, Alphabet beat expectations on overall revenue and profit for the fourth quarter of 2023. Alphabet generated $86.31 billion in revenue in its most recent quarter, an increase of 13% year-over-year. As for ad revenue, the company generated $65.52 billion versus the $65 billion analysts projected.
Overall, Alphabet brought in $307.39 billion in revenue for 2023, and despite the disappointing ad revenue numbers, the company is looking to attract a bigger audience at YouTube TV with potential expansion plans beyond the US. This year, the company brought in NFL Sunday Ticket, which DirectTV hosted for 29 years prior to the move. While Alphabet execs did not speak precisely to what this could mean for the future of live sports for the streaming television service, one has to wonder if it will position itself as a contender in the NBA rights conversation.
More insights from Alphabet’s recent earnings report:
- YouTube ads generated $9.2 billion in revenue, a 15% increase year-over-year.
- After cutting 6% of its workforce last year, Alphabet spent $2.1 billion on severances and related expenses. Alphabet’s CFO Ruth Porat said the company will spend about $700 million in similar expenses in Q1 of 2024.
- Google Cloud brought in $9.19 billion, a 26% increase in revenue year-over-year.
- Alphabet spent $1.8 billion in 2023 to exit some of its Google offices across the globe.
- Google Search attracted $48.02 billion in Q4, the third highest revenue driver at the company behind Google Services and advertising.
Microsoft
Microsoft reported better-than-expected financials on Tuesday in its earnings report for fiscal second-quarter 2024, yet the company’s stock fell by 2% in extended trading. Overall, Microsoft generated $62.0 billion in revenue for the quarter, an increase of 18% year-over-year. The company reported that revenue from its Azure and other cloud services grew by 30% overall, the biggest driver for its revenue success in its most recent quarter.
Microsoft CEO and chairman Satya Madella said the company is focused on applying AI at scale by infusing the emerging tech into every layer of its offerings. The Big Tech giant will also be investing more in its gaming sector following the biggest acquisition deal it’s ever made.
More insights from Microsoft’s recent earnings report:
- This was a big quarter for Microsoft since it also encompasses the enterprise software maker’s acquisition of Activision Blizzard.
- Net income for the quarter came in at $21.9 billion, an increase of 26% year-over-year.
- Microsoft Cloud generated $33.7 billion in revenue, up 24% year-over-year.
- This quarter, Microsoft returned $8.4 billion to shareholders in the form of share repurchases and dividends.
- Microsoft expects that its fiscal third-quarter revenue will land between $60 billion and $61 billion.
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