After the bell on this busiest day of earnings season so far, three major tech firms — Amazon (AMZN), Alphabet (GOOGL) and Microsoft (MSFT) — reported earnings. Bottom line, all three companies posted positive surprises and each of these companies is trading higher in the after market, following a strong Thursday in regular trading.
Perhaps most surprising is Microsoft's impressive results in its fiscal Q1 of 2016: the company brought in 67 cents per share on $21.66 billion in quarterly sales. With the company's Surface line, it would appear business is up, particularly in the cloud solution space. Its PC group, which includes advertising business and mobile, brought in $9.4 billion, which is higher than expected. The Productivity segment brought in $6.3 billion, which is also a beat, though Cloud was actually down from estimates at $5.9 billion.
Microsoft will not be issuing detailed guidance on its conference call coming up in a few minutes, but suffice it to say investors are happy with Microsoft's results. Shares are trading up roughly 5.5 percent in the after-market following a 1.76 percent climb in regular Thursday trading and a 9.4 percent gain over the last month alone. Microsoft was carrying a Zacks Rank #3 (Hold) up until its earnings report.
Alphabet — the publicly traded firm formerly known as Google — also brought in impressive numbers, with revenues of $18.68 billion (not including traffic acquisition costs [TAC]) beating the Zacks consensus estimate. Paid clicks overall climbed 23 percent in the quarter; expectations were for paid click to gain somewhere in the 18 percent range. Also, GOOGL announced a stock repurchase plan of $5 billion in Class C capital stock, which has been something investors have been clamoring for from Google, er Alphabet, for years.
As a result, shares of Alphabet are up 8.6 percent in late trading, which is actually down from an 11 percent jump immediately after the announcement. And this follows a strong ride among Alphabet investors over the course of 2015, where the stock had climbed more than 28 percent year to date, even before the company's latest earnings announcement.
Finally, Amazon brought in 17 cents per share on $25.4 billion, which is a big beat from the $24.85 billion expected. In the company's earnings statement, Amazon's CEO Jeff Bezos made its Fire tablet repricing under $50 a centerpiece of its forward outlook. Amazon also bumped up its guidance for Q4, with revenue expectations between $33.5 – $36.75 billion, the high end reaching noticeably above the Zacks consensus of $35.2 billion.
This is the second quarter in a row AMZN had been expected to post a negative earnings number and wound up besting expectations by a wide margin. Now with a boost to guidance, we may see some analyst activity among those covering Amazon; prior to the earnings report the company was listed as a Zacks Rank #2 (Buy), with Zacks Style scores of A for Growth and B for Momentum. Amazon shares are currently up more than 10 percent in after-market trading.
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