On October 25, Microsoft ( NASDAQ:MSFT ) reported its Q1 2023 earnings report and beat both top and bottom-line estimates. Yet, the company dropped hard at market opening on October 26. This drop was mainly because of slowing growth in the cloud and a difficult outlook, which made investors nervous. As a long-term investor in Microsoft stock, these slowdowns did not worry me at all, as the long-term trajectory remains perfectly intact.
Microsoft has one of the best businesses in the world, driven by growing digitalization and a strong position in all its business segments. I see Microsoft as fairly recession resistant, because of the raw importance of its products and services. I cannot tell you whether this is the bottom, and the stock might just as well go lower over the coming quarters, but I can tell you that current prices are setting you up for solid returns over the next 10 years when Microsoft ( NASDAQ:MSFT ) will increase its moat in crucial industries such as cloud, gaming, and personal computing.
Q1 2023 Results Were Strong But Resulted in a Sell-off Anyways
In the three months ending September 30, Microsoft ( NASDAQ:MSFT ) reported revenue of $50.1 billion, an increase of 11% year-over-year (16% in constant currency). Operating income came in at $21.5 billion, an increase of just 6% year-over-over (15% in constant currency). This shows us Microsoft was still able to grow its revenue by double digits, despite a difficult comparison and multiple economic headwinds such as a slowdown in PC shipments and IT spending. Operating income took a bigger hit, though on constant currency this was still a solid 15% increase. So, for the top and bottom lines, I se...
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