• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing

Microsoft's Earnings Confirm Fears of Economic Slowing

The primary issue now is whether MSFT earnings will produce a theme reflected in other reports.
By JAMES "REV SHARK" DEPORRE
Jan 25, 2023 | 06:45 AM EST
Stocks quotes in this article: MSFT, TSLA, COF

Market participants celebrated Microsoft's (MSFT) headline numbers on Tuesday night which showed a slight earnings beat but comments by management about the challenges that lie ahead trapped the early buyers. Microsoft was up as much as 5% last night but is now indicated to be 1.5% lower early on Wednesday morning. There is at least one downgrade so far this morning by BMO Capital to "underweight".

The primary thesis of market bears has been that the market has yet to discount slowing economic growth. The thinking is that forward earnings estimates are still too high, and valuations will come down as multiples erode.

The response to Microsoft's earnings adds weight to the bear's arguments, but there is still a slew of important earnings reports for the market to digest.

The next major earnings report comes tonight from Tesla (TSLA) . Tesla has enjoyed a sizable run after hitting a multi-year low on January 6, but the debate over Elon Musk and Twitter is still raging. It will be a major topic during the company's conference call later tonight.

So far, there have been few substantial EPS misses, but there are far fewer beats than usual, and guidance has been the main issue. The report from Capital One (COF) was the worst of the evening and reflected much higher credit card charge-offs than expected.

The primary issue now is whether Microsoft earnings will produce a theme reflected in other reports. Microsoft's growth was the slowest in six years and one of the key comments last night was, "The company is seeing customers exercise caution in this environment, and we saw results weaken through December."

The bulls have been emboldened recently by strong underlying support, good breadth, and poor positioning by hedge funds. The problem is that the market has not taken worries about slowing growth and a recession very seriously, but Microsoft is bringing the problem to the forefront.

My game plan is to watch closely to see if the recession theme gains further traction and start watching for favored names to test underlying support.

(Microsoft is a holding in the Action Alerts PLUS member club. Want to be alerted before AAP buys or sells MSFT? Learn more now.)

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, James "Rev Shark" DePorre had no position in the securities mentioned.

TAGS: Earnings | Economy | Investing | Markets | Stocks | Trading | Software & Services | Technology

More from Investing

As Fed Hour Approaches, Bulls Are Believers, Bears Are ... Incredulous

James "Rev Shark" DePorre
Feb 1, 2023 11:58 AM EST

One side has hope the Fed can tame inflation and set up a soft economic landing while the other thinks that expectation is ridiculous. Soon, we'll have some clues about what could play out.

Let's Take Off the VR Headsets Ahead of Meta's Earnings

Bruce Kamich
Feb 1, 2023 11:39 AM EST

The stock has made a big advance ahead of the report.

McDonald's Solid Quarter Hijacked by Trouble on the Horizon

Jonathan Heller
Feb 1, 2023 11:30 AM EST

When the largest restaurant chain -- and 'Big Five' name -- talks you take notice.

What Do C.H. Robinson's Charts Say About the Economy?

Bruce Kamich
Feb 1, 2023 10:48 AM EST

The freight transportation firm reports Q4 earnings after Wednesday's market close.

I Like AMD and Lisa Su Even If the Stock May Need a Trim

Stephen Guilfoyle
Feb 1, 2023 10:45 AM EST

Do not confuse prudent risk management with my not continuing to like this name.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 12:27 PM EST REAL MONEY

    LIVE EVENT: Chris Versace and "Sarge" Guilfoyle Share Their Stock Market Insights

    This Monday, Jan. 30, at 12 p.m., our very own exp...
  • 11:48 AM EST REAL MONEY

    Watch Doug Kass on the Daily Rundown!

    In today's Action Alerts PLUS Daily Rundown, Doug ...
  • 11:03 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend On Real Money

    It's time to start using this power to build great...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2023 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login