Market Update 29/1: Mega Tech Earning

The two biggest companies in the world, Microsoft and Apple, will report earnings.

Apple (NYSE:AAPL)

The earnings call will involve CEO Tim Cook and CFO Luca Maestri explaining to investors and analysts some of the details from Apple’s Q1 2024 results, due at around 4:30 p.m. ET

Prior to its earningt announcement the tech giant Apple (NASDAQ:AAPL) stated that it was going to make some major changes in its iOS, Safari, and App Store offerings in the European Union to comply with the Digital Markets Act (DMA) that will come into effect on March 7.

Apple after the company announced broad-based changes to its Services monetization model in European Union to comply with the requirements of the Digital Markets Act. where it will enable alternative app stores for consumers to download apps, and the ability to use alternative payment systems starting March of this year, and it charging a lower commission rate in the range of 10% to 17%.

For the holiday quarter, Apple secured $89.5 billion of revenue, which is down from the $90.1 billion reported in Q4 2022. Apple also declared an earnings per share of $1.46 2. Apple’s earnings forecast for Q1 2024 is an EPS of $2.10.

The AAPL stock is currently trading at $192.42. Prior to its report, Apple’s stock price dropped 1.72% last week; however, it is still 3532% higher than last year at the same period. Apple lowest stock price was $140.53 and its highest was $199.62 in the past 12 months.

Based on Wall Street analysts, the stock consensus remain ‘moderate buy’ with average price target is $205.3, an upside of 6.73%. With a high forecast of $250.00 and a low forecast of The average price target represents a 6.73% change from the last price of $192.42.

Microsoft (NYSE: MSFT)

Microsoft is set to release its financial performance for the second quarter of the 2024 fiscal year after the U.S. market closes on January 30, 2024. (5:30pm E.T). Microsoft is expected to report its best revenue in almost two years and solid increases to both net income and EPS for the second quarter of fiscal 2024.

Microsoft iso expected to report total revenue of $61 billion, a nearly 15.7% increase year-over-year with an expected earnings per share of $2.76, an 18.5% year-over-year growth with earnings estimate range of $2.71 to $3.01.

Microsoft has made a major bet on artificial intelligence (AI), investing billions of dollars with ChatGPT-creator OpenAI to integrate AI into many of its products. The company’s revenue growth may be driven by strong gains to its Intelligent Cloud segment revenue, which includes many of its AI-powered offerings. Much of Microsoft’s venture into AI is contained within its Intelligent Cloud segment, home to Azure, Nuance, Windows Server and Enterprise Services, among other offerings.

Microsoft announced the launch of Copilot Pro for the M365 Family and Personal edition, priced at $20 per month. This means individual users can now access the latest OpenAI models. Additionally, Copilot for the enterprise has eliminated the minimum purchase requirement for corporate users, indicating potential growth in small and medium-sized enterprise customers.

MSFT is currently traded at $403.93. The stock price had been constantly increasing (67.9%) over the past year and prior to the earning announcement, the stock increase 0.7% during the past 5 trading days. Microsoft lowest stock price was $240.07 and its highest was $407.01 in the past 12 months.

The stock consensus remain ‘Strong Buy’ by Wall Street Analyst. The average price target is $442.70; a 9.6% upside with a high forecast of $600.00 and a low forecast of $385.00.

Bottom Line

Microsoft’s leadership in the AI field may secure its position as the global market leader. Meanwhile, its competitor Apple faces challenges with iPhone 15 Pro sale along with its DMA requirement for EU apps sale deepen the gap. However, not to overlook the increase of other competitors in AI that will affecting Microsoft position if not scaling fast.

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