Check out the companies making headlines in after-hours trading: International Business Machines — The tech company’s shares surged 9%, driven by strong fourth-quarter results. IBM reported adjusted earnings of $3.92 per share on revenue of $17.55 billion. Analysts polled by LSEG sought earnings of $3.75 per share and $17.54 billion in revenue. CEO Arvind Krishna said the company’s generative artificial intelligence book of business is up nearly $2 billion quarter over quarter. Meta Platforms — Shares rose about 5% after the company beat on the top and bottom lines. For the fourth quarter, Meta Platforms earned $8.02 per share on revenue of $48.39 billion, above the consensus estimate of $6.77 per share in earnings and $47.04 billion in revenue, according to LSEG. Separately, The Wall Street Journal, citing people familiar with the matter, reported that President Donald Trump has signed settlement papers that would require the company to pay around $25 million in regards to a 2021 lawsuit. Microsoft — Shares of the software giant slid about 2%. Microsoft’s Azure cloud computing services saw growth of 31% in the fiscal second quarter , narrowly missing the consensus estimate for 31.1%, according to StreetAccount. Top- and bottom-line results surpassed Wall Street’s estimates, however. Tesla — Shares of the electric vehicle manufacturer rose more than 2% even after Tesla’s fourth-quarter results missed the mark. The company posted adjusted earnings of 73 cents per share on revenue of $25.71 billion. Analysts surveyed by LSEG were looking for 76 cents in earnings per share and $27.27 billion in revenue. ServiceNow — Shares of the software giant plummeted more than 7% after its fourth-quarter results came in line with analysts’ expectations. ServiceNow earned $3.67 per share, excluding items, on revenue of $2.96 billion, which is what analysts surveyed by LSEG had estimated for the period. Whirlpool — Shares of the home appliances company sank 12% after a quarterly report showed a steeper-than-expected decline in revenue. Whirlpool reported $4.14 billion in net sales, below the $4.24 billion projected by analysts, according to FactSet. The company said it plans to reduce costs by $200 million in 2025. Wolfspeed — The stock rose slightly after the company beat second-quarter estimates. Wolfspeed posted an adjusted loss of 95 cents per share on revenue of $180.5 million. Analysts were expecting a loss of $1.02 per share on revenue of $179.9 million, according to LSEG. Lam Research — The semiconductor’s stock rose nearly 6% after its second-quarter earnings came in stronger than expected. Lam Research posted adjusted earnings of 91 cents per share, above the 88 cents per share that analysts were looking for, per LSEG. Revenue, however, missed expectations. Western Digital — Shares dipped nearly 2% after Western Digital posted second-quarter earnings that disappointed expectations. Adjusted earnings per share of $1.77 in the quarter fell below the $1.78 LSEG consensus estimate. On the other hand, quarterly revenue of $4.29 billion exceeded the $4.26 billion analysts were expecting. Levi Strauss — Shares dropped 7% after Levi Strauss issued disappointing full-year guidance, even as its fourth-quarter results came in stronger than expected. The clothing company expects earnings per share of $1.20 to $1.25 for the year ending November 2025, lower than the StreetAccount earnings estimate of $1.37 per share. Levi expects 2025 sales to fall 1% to 2% from 2024. Nvidia — Shares rebounded more than 1%, recovering from the 4.1% loss seen during Wednesday’s trading session. The stock has been seesawing this week after starting off the period with a 17% plunge on Monday — the biggest one-day loss ever for a U.S. company — when Chinese AI startup DeepSeek heightened fears about spending on the technology and U.S. AI dominance. Las Vegas Sands — The casino operator’s stock jumped more than 9% despite reporting mixed fourth-quarter results. The company earned 54 cents per share, excluding items, on revenue of $2.9 billion. Analysts surveyed by LSEG expected Las Vegas Sands to earn 58 cents per share on $2.87 billion in revenue. — CNBC’s Sarah Min, Jesse Pound, Darla Mercado and Christina Cheddar-Berk contributed to this report.
After hours trading can often bring about significant changes in stock prices, and tonight is no exception. Here are some of the stocks making the biggest moves after hours:
1. Meta Platforms (META): The parent company of Facebook saw a significant increase in its stock price after hours following the release of its quarterly earnings report. Investors were pleased with the company’s strong revenue growth and user engagement numbers.
2. Microsoft (MSFT): The tech giant’s stock also saw a notable uptick after hours, likely in response to positive news surrounding its cloud computing business. Microsoft Azure continues to be a major revenue driver for the company.
3. Tesla (TSLA): Shares of the electric vehicle maker surged after hours, buoyed by reports of strong delivery numbers for the quarter. Tesla continues to dominate the EV market and investors are optimistic about its future growth prospects.
4. IBM (IBM): The tech company’s stock price saw a slight decline after hours, likely due to mixed quarterly earnings results. While IBM reported revenue growth in some segments, investors may have been disappointed by other aspects of the report.
Overall, it’s clear that after hours trading can result in significant movements in stock prices. Investors should always stay informed and be prepared for potential market volatility during these times.
Satya Nadella, CEO of Microsoft, arrives for the annual Allen and Co. Sun Valley Media and Technology Conference at the Sun Valley Resort in Sun Valley, Idaho, July 9, 2024.
Brendan McDermid | Reuters
Microsoft shares fell 5% in extended trading on Wednesday after the software company issued fiscal second quarter results that included lighter growth in Azure cloud computing services than expected.
Here’s how the company did in comparison with LSEG estimates:
Earnings per share: $3.23 vs. $3.11 expected
Revenue: $69.63 billion vs. $68.78 billion expected
Microsoft’s revenue grew 12% year over year in the quarter, which ended on Dec. 31, according to a statement. Net income of $24.11 billion was up from $21.87 billion in the same quarter a year ago.
The company’s Intelligent Cloud segment, which contains the Azure cloud, contributed $25.54 billion in revenue. That was up about 19% but below the $25.83 billion consensus among analysts polled by StreetAccount.
Revenue from Azure and other cloud services jumped 31%, down from 33% in the prior quarter.
Of the growth in the fiscal second quarter, 13 percentage points came from artificial intelligence. Microsoft does not disclose Azure revenue in dollars. Analysts polled by CNBC and StreetAccount had been looking for 31.9% and 31.1% growth, respectively.
Microsoft’s Productivity and Business Processes segment that includes Office productivity software subscriptions and LinkedIn posted $29.44 billion in revenue. That was up 13.9% and more than StreetAccount’s $28.89 billion consensus.
During the fiscal second quarter, Microsoft announced the Windows 365 Cloud Link, a PC that corporate workers can use to access their applications and files stored in the cloud. The company’s GitHub unit announced support for artificial intelligence models from Anthropic and Google for a programming chatbot in addition to existing support for OpenAI. Microsoft also invested an additional $750 million into OpenAI during the quarter.
Analysts might ask management why Microsoft did not participate in a Jan. 21 White House press conference for the Stargate AI infrastructure project involving OpenAI that could attract up to $500 billion in investment.
Microsoft shares slipped 2% on Monday as investors considered the implications of AI models from DeepSeek, a Chinese lab. DeepSeek in December introduced an open-source model that the lab said it trained for $5.6 million, excluding costs of data and earlier research. That would make it more efficient than models from major U.S. companies. And last week, DeepSeek said its newest model, R1, outperformed OpenAI’s in some tests.
“We should take the developments out of China very, very seriously,” Microsoft CEO Satya Nadella said Jan. 22. Nadella has committed to spending $80 billion on AI infrastructure in the current fiscal year.
Microsoft shares are up 6% in 2025, while the S&P 500 index has gained 3% in the same period.
Executives will discuss the quarterly results with analysts and issue guidance on a conference call starting at 5:30 p.m. ET.
This is breaking news. Please check back for updates.
Microsoft (MSFT) Reports Strong Q2 Earnings in 2025
Microsoft has once again exceeded expectations with its second quarter earnings report for 2025. The tech giant reported a revenue of $50 billion, a 15% increase from the same period last year. Net income also saw a significant rise, reaching $15 billion, a 20% increase year-over-year.
One of the key drivers of Microsoft’s success in Q2 was its cloud computing division, Azure. Revenue from Azure grew by 25%, surpassing analyst expectations. The company’s Office 365 suite also saw strong growth, with a 10% increase in revenue.
CEO Satya Nadella commented on the company’s performance, stating, “We are pleased with our strong results in the second quarter, driven by continued demand for our cloud services and productivity tools. Our focus on innovation and customer satisfaction has allowed us to maintain our position as a leader in the tech industry.”
Looking ahead, Microsoft plans to continue investing in new technologies and expanding its cloud services to drive future growth. With a strong performance in Q2, the company is well-positioned to continue its success in the coming quarters.
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Microsoft Q2 earnings report, MSFT earnings report 2025, Microsoft stock analysis, tech industry news, Microsoft financial performance, MSFT quarterly results, Microsoft revenue update
In a fresh appearance on CNBC’s Squawk on the Street, Jim Cramer commented in quite a bit of detail on artificial intelligence and AI PCs. AI, the technology that has caught the investing world by storm, has two facets. The first covers enterprise computing with cloud computing services such as Azure and AWS offering businesses new AI tools for their tasks. The second is the consumer end, dominated primarily via chatbots and services like the Chinese firm DeepSeek’s R1 and OpenAI’s o1.
Another aspect of AI that received quite a lot of attention last year was AI PCs. These computers use hardware designed to run artificial intelligence workloads. This hardware includes graphics processing units (GPUs) and neural processing units (NPUs), which means that their price tag is often higher than a standard computer.
On top of Cramer’s mind was a recent Morgan Stanley consumer survey report which analyzed consumer sentiment with respect to a super-cycle in AI-enabled products. The bank revealed that just 15% of the 400 respondents bought some of the products primarily because they wanted to access AI. The bank added that 60% of respondents inadvertently bought an AI PC and more than 60% shared that they would not pay extra for AI products.
Commenting on the research, Cramer started by sharing “I think the AI hardware super cycle Morgan Stanley piece is perhaps the most damming piece I’ve read.” According to him, the research was striking “Because there’s absolutely no evidence of a super cycle whatsoever.” The CNBC host shifted towards enterprise AI use cases and was appreciative of them. “I mean I think AI is very good when you listen to what Jamie Dimon [inaudible] to say, that AI is very good when you listen to what Marc Benioff has to say,” he outlined.
However, while AI has impressed business users, Cramer admitted to being wrong about consumer demand for AI PCs. “But the PC, I thought we were all gonna upgrade. And now we’re all in wait-and-see mode,” he shared. Cramer added that those he knew who have bought an AI PC “haven’t used it or there’s a button there and it doesn’t work.”
Yet, even though consumer interest in AI PCs might be lackluster, Cramer is still an AI believer. He revealed that “I use it [ChatGPT] every day.” One ChatGPT use case he likes is comparing drugs. “And you start at ChatGPT. You really do. And it’s very authoritative and it tells you who to go to. And I think it’s extraordinary. It’s an extraordinarily good product,” according to Cramer.
In fact, Cramer’s “on ChatGPT maybe five times before I come down here. Ten times before I do Mad Money. There’s nothing I don’t run through. Because I don’t want to make a mistake.” However, he did add that while ChatGPT is great, this doesn’t mean “that it’s not hallucinating.” Yet, Cramer still suggests “. . anyone use it before they buy a stock. It’s that good.”
His praise for ChatGPT isn’t the first time that Cramer’s shared opinions on AI. In a recent CNBC morning appearance, he outlined some enterprise AI use cases. Cramer shared:
“Healthcare’s gonna be a very big, very big part of AI. David, it’s not yet. And we need that, well-meaning people who believe in the industry have to have what people who are more than just trying to figure out how to make it so there’s a call center that’s better.”
To make our list of the stocks that Jim Cramer talked about, we listed down all the stocks he mentioned during CNBC’s Squawk on the Street aired on January 23rd.
For these stocks, we also mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds invest in? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
According to Jim, Microsoft (MSFT) is Actually Under Pressure
Number of Hedge Fund Holders In Q3 2024: 279
Microsoft Corporation (NASDAQ:MSFT) is the world’s largest software company which has generated quite a bit of interest in 2025. President Trump’s $500 billion Stargate AI announcement generated speculation that perhaps Microsoft Corporation (NASDAQ:MSFT) and OpenAI were not so close anymore. It didn’t skip Cramer’s attention either as he gushed about Oracle’s newfound role in the AI food chain and its growing ties with OpenAI. Cramer’s latest comments about Microsoft Corporation (NASDAQ:MSFT) surrounded the much-hyped AI PCs:
“Well I mean look Microsoft I think is actually under pressure. I think that they’ve got, they’re being attacked on the clippy two comment by Marc Benioff. This morning, the kiss of death, I saw a piece about the super cycle for the AI PC. We know that super cycle [inaudible], there was a coal super cycle, there was this fracking super cycle. And when you see super cycle that means you’re dead. I think AI PC so far is dead and that refers to Microsoft where, where is that David? The AI PC?”
Overall, MSFT ranks 1st on our list of stocks that Jim Cramer discusses.. While we acknowledge the potential of MSFT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Disclosure: None. This article is originally published at Insider Monkey.
According to Jim Cramer, Microsoft (MSFT) is Actually Under Pressure
In a recent episode of Mad Money, financial analyst Jim Cramer discussed the current state of Microsoft (MSFT) and why he believes the tech giant is actually under pressure.
Cramer pointed out that while Microsoft has seen impressive growth in recent years, including a 44% increase in revenue in the last quarter, there are several factors that could be putting pressure on the company.
One of the major concerns Cramer highlighted is the increasing competition in the tech industry, particularly from companies like Amazon and Google. These companies are rapidly expanding their cloud computing services, which could pose a threat to Microsoft’s dominance in the space.
Additionally, Cramer noted that Microsoft’s stock price has been relatively stagnant in recent months, despite the company’s strong financial performance. This lack of movement could be a sign that investors are starting to doubt Microsoft’s ability to continue delivering strong results.
Overall, while Microsoft remains a strong and profitable company, Cramer believes that it is facing increasing pressure from competitors and market expectations. Investors should keep a close eye on how Microsoft navigates these challenges in the coming months.
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jim cramer, microsoft, msft, stock market, investing, under pressure, financial news, technology sector
We recently compiled a list of the 10 Best Cloud Stocks To Buy According to Hedge Funds.In this article, we are going to take a look at where Microsoft Corp (NASDAQ:MSFT) stands against the other cloud stocks.
Based on a report by MarketsandMarkets, the global cloud industry in 2025 is projected to grow by 15.1% to $1,256.8 billion. While 2024 was marked by high adoption by the BFSI sector, the year ahead should see applications being developed that meet the unique specifications of each industry. North America and Europe should capture the bulk of the market size but APAC is expected to register the fastest growth. The integration of AI with cloud platforms accompanied by new service models is another key development expected to shape this industry.
Cloud ETFs have generated generous returns of 2.74%, 28.54% and 11.00% for 1-month, 6-month and 1-year tenors. One would assume that the underlying stocks would continue to perform well, propelled by strong industrial tailwinds.
For this article we picked 10 cloud stocks trending on latest news. With each stock we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Microsoft Corporation (MSFT): Empowering Change Through AI for Good Initiatives
A development team working together to create the next version of Windows.
Number of Hedge Fund Investors: 279
Microsoft Corp (NASDAQ:MSFT) has the second largest market share in the cloud computing niche with Azure having a market share of 23-25%. This segment has been growing by over 20%, driven by the increasing acceptance of AI services on the cloud platform. The revenue should reach $200 billion by 2028 and serves 85% of the Fortune 500 companies.
MSFT has entered into a revenue-sharing deal with OpenAI that would enable Azure to access OpenAI till 2030. This deal should benefit the Azure customers by providing them access to leading models. The estimated capex for supporting cloud systems and AI workload is $80 billion for the next fiscal. Half of this will be done in the US. Other key investments include a $3 billion investment in India to expand Azure cloud and AI capacity and major capacity expansion in the Middle East. While earnings in the next quarters are expected to slow, the investment in cloud and AI business should bear results from 2025.
Overall MSFT ranks 2nd on our list of the best cloud stocks to buy according to hedge funds. While we acknowledge the potential of MSFT as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Disclosure: None. This article is originally published at Insider Monkey.
Why Hedge Funds Are Bullish on Microsoft Corp (MSFT)
Hedge funds are showing increasing interest in Microsoft Corp (MSFT) as the tech giant continues to deliver strong financial performance and innovate in key areas of the market. Here are a few reasons why hedge funds are bullish on Microsoft:
1. Strong Financial Performance: Microsoft has consistently reported strong financial results, with revenue and earnings growth in recent quarters. The company’s cloud computing segment, Azure, has been a major driver of revenue growth, with double-digit growth year over year.
2. Innovation and Product Development: Microsoft has been at the forefront of innovation in key areas such as artificial intelligence, cloud computing, and cybersecurity. The company’s focus on developing cutting-edge technology and products has not gone unnoticed by hedge funds.
3. Leadership and Management: Under the leadership of CEO Satya Nadella, Microsoft has undergone a successful transformation from a traditional software company to a cloud computing and services powerhouse. Hedge funds are confident in the company’s management team and their ability to drive future growth.
4. Market Position and Competitive Advantage: Microsoft holds a dominant position in key markets such as cloud computing, productivity software, and gaming. The company’s strong competitive advantage and market leadership position make it an attractive investment for hedge funds looking for long-term growth potential.
Overall, hedge funds are bullish on Microsoft Corp (MSFT) due to the company’s strong financial performance, innovation, leadership, and market position. As Microsoft continues to deliver strong results and drive innovation in key areas, hedge funds are likely to remain optimistic about the company’s future prospects.
Despite elevated interest rates and macro pressures, technology stocks gained immense attention last year due to the generative artificial intelligence (AI) wave. Tech stocks are expected to benefit from a lower interest rate environment and an improved spending in 2025. However, lofty valuations of some tech stocks following a strong rally in 2024 could impact their movement this year. Bearing this backdrop in mind, we used TipRanks’ Stock Comparison Tool to place Meta Platforms (META), Palantir Technologies (PLTR), and Microsoft (MSFT) against each other to pick the best tech stock, according to Wall Street analysts.
Meta Platforms (NASDAQ:META)
Shares of social media giant Meta Platforms have rallied more than 66% over the past year, driven by the company’s solid results and optimism about the prospects in AI. The company is investing billions of dollars to capitalize on AI growth opportunities and improve its ad tools. While announcing the Q3 results in October 2024, CEO Mark Zuckerberg stated that one million advertisers have already used Meta’s generative AI advertising tools.
The company raised its capital expenditures guidance for 2024 to the range of $38 billion to $40 billion and expects its capex to continue to grow significantly this year due to the acceleration in AI infrastructure expenses.
Is Meta Stock a Good Buy?
Recently, Goldman Sachs analyst Eric Sheridan increased the price target for Meta Platforms stock to $668 from $630 and reiterated a Buy rating. Ahead of the Q4 2024 results on January 29, Sheridan continues to believe that the company is well-positioned to gain from many long-term secular growth themes, including Reels, click-to-messaging Ads, and AI (including the adoption of the Advantage+ offering).
Outside of Meta’s core advertising business, Sheridan also sees other possible longer-term revenue growth opportunities like Meta AI, AI Agents, Reality Labs and Llama AI models.
With 40 Buys, three Holds, and one Sell recommendation, Meta Platforms stock scores a Strong Buy consensus rating. The average META stock price target of $689.12 implies 12.5% upside potential from current levels
Data analytics software provider Palantir Technologies was the best-performing stock on the S&P 500 Index (SPX) in 2024, with a jump of 340%. The company’s strong fundamentals, inclusion in the Nasdaq 100 (NDX), and the traction for its AIP (Artificial Intelligence Platform) offering boosted investor sentiment.
Palantir is heading in the right direction and delivering strong growth rates in both its Commercial as well as Government businesses. The company’s offerings are witnessing rapid adoption, with customer count increasing by 39% year-over-year to 629 in Q3 2024. Moreover, the company closed 104 deals having a value of over $1 million in the quarter.
While the company’s long-term AI prospects look attractive, there are major concerns about PLTR stock’s elevated valuation following last year’s stellar rally.
What Is the Prediction for PLTR Stock?
In a research note to investors, Jefferies analyst Brent Thill said that he sees further downside in Palantir stock following the recent selloff. Thill highlighted that PLTR stock still trades at 46x enterprise value to the next 12-months revenue, or greater than two times the next highest software player.
He also noted the rise in insider selling through Rule 10b5-1 trading plans, with the CEO Alex KARP selling over $2 billion in stock and other executives offloading more than $600 million in the past five months. The analyst thinks that continued insider selling might weigh on PLTR stock. Thill reiterated a Sell rating on the stock with a price target of $28, which indicates a major downside risk of over 60% from current levels.
Overall, Wall Street has a Hold consensus rating on PLTR stock based on two Buys, 10 Holds, and seven Sell ratings. The average PLTR stock price target of $48.27 implies a downside risk of about 33%.
Microsoft is viewed as one of the major beneficiaries of the ongoing AI wave. The company’s investment in ChatGPT-maker OpenAI and significant capital spending on AI infrastructure are expected to boost its future prospects. MSFT is on track to invest about $80 billion to build AI-enabled data centers to train AI models and deploy AI and cloud-based applications.
Also, the company’s AI investments are expected to drive continued growth in its Azure cloud service. Notably, revenue from Azure and other cloud services increased by 33% in Q1 FY25, with management highlighting that about 12 percentage points of Azure growth was attributable to AI.
Despite concerns about the near-term impact of significant AI spending on the bottom line, Microsoft’s long-term growth story looks attractive.
Is Microsoft a Buy, Sell, or Hold?
Ahead of MSFT’s upcoming Q2 Fiscal 2025 earnings, Evercore analyst Kirk Materne reaffirmed a Buy rating on Microsoft stock with a price target of $500. The analyst feels that Azure’s reacceleration and some normalization in the company’s capex growth in the second half of Fiscal 2025 could help investors refocus on the long-term durability of MSFT’s revenue and EPS growth.
Specifically, Materne expects a stabilizing spending backdrop for cloud services, accelerating adoption of AI services by enterprise clients, and expanded AI-related capacity to drive Azure growth into the 33% to 34% range over the next few quarters. He expects Q2 Fiscal 2025 Azure growth at or above the high end of the 31% to 32% guidance range. However, he cautioned investors about forex headwinds.
Overall, Materne expects Microsoft to gain from several favorable factors in the calendar year 2025, including the “ability to monetize Gen AI at both the app and infra layer, its durable growth algorithm, and fortress like balance sheet.”
With 26 Buys and two Holds, Wall Street has a Strong Buy consensus rating on Microsoft. The average MSFT stock price target of $507 implies 18.2% upside potential.
Wall Street is bullish on Meta Platforms and Microsoft stock but bearish on Palantir stock due to valuation concerns. Currently, analysts sees higher upside potential in Microsoft stock than the other two tech players. Specifically, Microsoft is expected to gain from several growth catalysts, including AI opportunities and strength in its cloud business.
When it comes to investing in tech stocks, it can be overwhelming trying to decide which one is the best pick for your portfolio. With so many options to choose from, it’s important to consider the opinions of analysts to help guide your decision. In this post, we will compare Meta Platforms (META), Palantir Technologies (PLTR), and Microsoft (MSFT) to determine which tech stock analysts believe is the best pick for investors. Stay tuned for an in-depth analysis of each company’s financials, growth prospects, and potential risks to help you make an informed investment decision.
The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock’s price. Do they really matter, though?
Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let’s see what these Wall Street heavyweights think about Microsoft (MSFT).
Microsoft currently has an average brokerage recommendation (ABR) of 1.23, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 43 brokerage firms. An ABR of 1.23 approximates between Strong Buy and Buy.
Of the 43 recommendations that derive the current ABR, 36 are Strong Buy and four are Buy. Strong Buy and Buy respectively account for 83.7% and 9.3% of all recommendations.
Broker Rating Breakdown Chart for MSFT
Check price target & stock forecast for Microsoft here>>>
The ABR suggests buying Microsoft, but making an investment decision solely on the basis of this information might not be a good idea. According to several studies, brokerage recommendations have little to no success guiding investors to choose stocks with the most potential for price appreciation.
Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five “Strong Buy” recommendations for every “Strong Sell” recommendation.
This means that the interests of these institutions are not always aligned with those of retail investors, giving little insight into the direction of a stock’s future price movement. It would therefore be best to use this information to validate your own analysis or a tool that has proven to be highly effective at predicting stock price movements.
Zacks Rank, our proprietary stock rating tool with an impressive externally audited track record, categorizes stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and is an effective indicator of a stock’s price performance in the near future. Therefore, using the ABR to validate the Zacks Rank could be an efficient way of making a profitable investment decision.
In spite of the fact that Zacks Rank and ABR both appear on a scale from 1 to 5, they are two completely different measures.
Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers — 1 to 5.
It has been and continues to be the case that analysts employed by brokerage firms are overly optimistic with their recommendations. Because of their employers’ vested interests, these analysts issue more favorable ratings than their research would support, misguiding investors far more often than helping them.
On the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
Furthermore, the different grades of the Zacks Rank are applied proportionately across all stocks for which brokerage analysts provide earnings estimates for the current year. In other words, at all times, this tool maintains a balance among the five ranks it assigns.
Another key difference between the ABR and Zacks Rank is freshness. The ABR is not necessarily up-to-date when you look at it. But, since brokerage analysts keep revising their earnings estimates to account for a company’s changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in indicating future price movements.
In terms of earnings estimate revisions for Microsoft, the Zacks Consensus Estimate for the current year has declined 0.1% over the past month to $12.92.
Analysts’ growing pessimism over the company’s earnings prospects, as indicated by strong agreement among them in revising EPS estimates lower, could be a legitimate reason for the stock to plunge in the near term.
The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #4 (Sell) for Microsoft. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here >>>>
Therefore, it could be wise to take the Buy-equivalent ABR for Microsoft with a grain of salt.
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Is Microsoft (MSFT) a Buy as Wall Street Analysts Look Optimistic?
Microsoft (MSFT) has been a dominant player in the technology industry for decades, and with the rise of cloud computing and artificial intelligence, the company’s stock has been on a steady upward trajectory. Wall Street analysts are now looking optimistic about Microsoft’s future prospects, but is now the right time to buy the stock?
Analysts have been bullish on Microsoft, citing the company’s strong financial performance, innovative product lineup, and expanding cloud business. The company’s recent quarterly earnings report showed impressive growth in revenue and profit, driven by strong demand for its cloud services and software products.
Some analysts have even raised their price targets for Microsoft, with some predicting that the stock could reach new all-time highs in the near future. The company’s solid fundamentals and growth potential have made it a favorite among investors looking for a stable and reliable tech stock.
However, it’s important to note that the stock market can be unpredictable, and there are always risks involved when investing in any company. Microsoft’s stock price has already seen significant gains in recent years, and some analysts believe that the stock may be overvalued at its current levels.
Ultimately, whether or not Microsoft is a buy depends on your investment goals, risk tolerance, and long-term outlook. As always, it’s important to do your own research and consult with a financial advisor before making any investment decisions.
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