After watching the market get a beat down over the last two weeks it is nice to see that the big boys of tech are hitting home runs.
Alphabet is up about 10% today on nice earnings and the inauguration of a dividend. Alphabet is Google’s parent because all big tech stocks must change their name to something stupid at some point (see Meta Platforms (META)).
Alphabet is now worth $2.13 trillion in terms of market cap which moves it ahead of chip maker and market darling Nvidia (NVDA). The stock jumped because they reported a 15% surge in revenues and a whopping 46% increase in income year-over-year. Cloud revenue was up 28% and operating margins increased from 32% to 33%.
The company also announced a $70 billion share buyback and a $0.20 dividend. GOOG has a p/e of 30. You should own some if you don’t already.
MSFT
Microsoft (MSFT) also reported a strong quarter. Microsoft’s $2.94 earnings per share topped estimates, and its $61.9 billion in sales topped projections.
In its AI-heavy cloud division, it reported $12.5 billion in operating income which also beat estimates. MSFT is up about 5% today. The company has a pe/ of 37 and a 0.75% dividend yield. Full disclosure: I own Microsoft.
AMZN
Up next week is Amazon which reports earnings on April 30. With both Alphabet and Microsoft reporting better-than-expected numbers from their cloud divisions, one would expect Amazon with its Amazon Web Services (AWS) division to crush it.
It should be noted that back in the fourth quarter of 2020 when Jeff Bezos traded Silicon Valley for silicone mountains and partied it up in Maimi, he was replaced as CEO by Andrew Jassy. Jassy had great success as the former CEO of Amazon Web Services which should continue.
AWS reported $24.26 billion in revenue for the third quarter or roughly twice that of Microsoft. AWS also has AI capabilities. In fact, Amazon extended its partnership with Nvidia (NVDA) to power its portfolio with generative AI technology using the Nvidia Blackwell GPU platform.
AWS also has a partnership with a South Korean AI startup called Upstate.
I expect that AMZN will report blockbuster earnings as well next week. The stock is up 3.19% today. The May 3rd call $192.5 call option which is out of the money is up 64% today. The $190 is up 55% and has 18,800 open contracts. The smart money is expecting a blowout earnings number as well.
My co-editor Brit Ryle has been telling people to buy Amazon for the past year and he’s been right on the money.
SNAP
In other earnings news, Snap (SNAP) beat its own guidance by reporting 422 million daily active users and 1.2 billion in revenue which was an increase of 21% year over year. The stock is 26% today.For those of you who still don’t believe we are in a dynamic bull market these types of tech earnings should convince you. Despite the pundits clamoring about “soft landings” and prattling on about the Fed’s dot plots the market is telling us that we are going higher.
All the best,
Christian DeHaemer
Outsider Club
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