Fast Money Blog- 8/2/24

This week we saw Wall Street become a victim of its own sentiment, as the Wall Street money machine would like to see a Fed rate cut within the next 30 days. This, plus Amazon’s weak guidance for Q3 2024, caused both the stock and the Dow Jones Industrial Average to decline. 

This week on Wall Street saw two heavyweights release their earnings: Amazon.com, Inc. (AMZN) and Microsoft Corporation (MSFT).

On Thursday, August 1st, AMZN released their Q2 2024 earnings, with top-line quarterly revenue of $148 billion an increase of about 10% year-over-year.

Highlights

Amazon saw advertising sales grow 20% year-over-year for a total of $12.7 billion in Q2 2024.  

Amazon Web Services, its cloud revenue segment, grew 19% to $25 billion.

However, it was Amazon’s future guidance that caused the drop in both the stock and Dow Jones Industrial Average.

On Tuesday, July 30th, MSFT released Q4 2024 earnings with revenue of $64.7 billion, up 15% year-over-year.

Some Highlights

Microsoft’s Intelligent cloud segment had quarterly revenue of $28.5 billion, up 19% year-over-year. 

The Productivity and Business Processes segment, which includes Dynamics, LinkedIn and the Office suite of products, brought in $20.3 billion, an increase of 11% year-over-year.     Microsoft 365 Consumer subscribers grew to 82.5 million.

The company also reported revenue of $15.9 billion, an increase of 14% year-over-year, in their More Personal Computing segment.  

So, Tyrone Why Did MSFT Stock Drop?

The stock dropped because of the slight deceleration in revenue growth in certain sectors, mostly in the cloud segment.

The upside of MSFT’s earnings report was as follows:

Microsoft’s capital expenditures for Q4 came in at $19 billion, with 60% of that money going to Nvidia Corporation (NVDA) to develop their AI infrastructure. This is why on Wednesday, July 31st, there was a pop in NVDA shares.

It’s this commitment to AI which suggests that Microsoft will see a rise in future revenue.  

I consider MSFT a winner in the future on all fronts. 

I expect to volatility to continue for the next 15 days, as we conclude the Q2 earnings period. 

Allow the market to correct itself and be prepared to ride the retracement over the next 30 days.