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Will Cloud Computing Results Aid Big Tech Earnings?
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Cloud computing has become a major focus in the market over the last several years, with the technology allowing companies and consumers to achieve digital feats that otherwise felt impossible.
And with many tech companies unveiling quarterly results in the coming weeks, market participants will undoubtedly be focused on cloud-computing spending trends amid recent headwinds.
Regarding the Technology sector as a whole, Q2 earnings are expected to be down -4.4% on -0.1% lower revenues. This is illustrated in the chart below.
How do expectations currently stack up for a few of the major cloud players, such as Amazon (AMZN - Free Report) , Alphabet (GOOGL - Free Report) , and Microsoft (MSFT - Free Report) ? Let’s take a closer look.
Amazon
Amazon has enjoyed a dominant cloud-computing stance thanks to the rapid growth of Amazon Web Services (AWS). AWS generated $21.4 billion in net sales throughout its latest quarter, improving 16% year-over-year and exceeding the Zacks Consensus estimate by 1.4% after two consecutive misses.
Image Source: Zacks Investment Research
Operating income within AWS took a hit throughout the latest quarter, reported at $5.1 billion vs. the year-ago figure of $6.5 billion due to higher expenses within the segment. The upcoming print will give us a better idea of AWS's profitability picture, a development that investors have closely watched amid tech spending headwinds.
Regarding our expectations, the Zacks Consensus estimate for AWS net sales stands at $21.5 billion, 9% higher than year-ago sales of $19.7 billion. Analysts have been modestly bullish for the quarter-to-be reported overall, with the $0.34 per share estimate up 3% since April and implying an improvement of 240% year-over-year.
Image Source: Zacks Investment Research
Alphabet
To the likes of investors, Google Cloud turned its first-ever profit in 2023 Q1, reporting revenue of $7.4 billion and reflecting year-over-year growth of 27%. The company has consistently exceeded the Zacks Consensus estimate regarding cloud revenue as of late, chaining together three consecutive beats.
Image Source: Zacks Investment Research
And for the upcoming release, our consensus estimate for Google Cloud revenue sits at $7.7 billion, implying growth of 22% and reflecting a slight cooldown relative to recent year-over-year sales growth rates.
In addition, many will be closely tuned into Alphabet’s advertising results and commentary on current spending trends within. We expect the tech titan to report $56.9 billion in ad revenue, reflecting a modest 1% improvement from the year-ago quarter.
Microsoft
In Microsoft’s latest Q3 release, cloud strength helped drive better-than-expected results, with Intelligent Cloud revenue growing 16% year-over-year to $22.1 billion.
Following the better-than-expected cloud results, CEO Satya Nadella said, “Across the Microsoft Cloud, we are the platform of choice to help customers get the most value out of their digital spend and innovate for this next generation of AI.” With AI being Wall Street’s shiny new toy, it’s reasonable to expect the company to spend considerable time discussing the technology in a cloud context.
For the upcoming release, the Zacks Consensus estimate for Intelligent Cloud revenue resides at $23.7 billion, suggesting an improvement of 13% from the year-ago quarter. Like those above, the company has been undergoing a slight cooldown regarding year-over-year cloud revenue growth rates.
Bottom Line
With big-tech earnings looming, many have turned focus to cloud spending trends.
And this week, we have Microsoft (MSFT - Free Report) and Alphabet (GOOGL - Free Report) on the docket, both scheduled to unveil quarterly results on Tuesday, July 25th, after the market’s close.
Next week, on August 3rd, we’ll hear from Amazon (AMZN - Free Report) .
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Will Cloud Computing Results Aid Big Tech Earnings?
Cloud computing has become a major focus in the market over the last several years, with the technology allowing companies and consumers to achieve digital feats that otherwise felt impossible.
And with many tech companies unveiling quarterly results in the coming weeks, market participants will undoubtedly be focused on cloud-computing spending trends amid recent headwinds.
Regarding the Technology sector as a whole, Q2 earnings are expected to be down -4.4% on -0.1% lower revenues. This is illustrated in the chart below.
Image Source: Zacks Investment Research
For those interested in a thorough analysis of Q2 earnings, please check out our most recent Earnings Preview –> Will Big Tech Earnings Keep the Rally Going?
How do expectations currently stack up for a few of the major cloud players, such as Amazon (AMZN - Free Report) , Alphabet (GOOGL - Free Report) , and Microsoft (MSFT - Free Report) ? Let’s take a closer look.
Amazon
Amazon has enjoyed a dominant cloud-computing stance thanks to the rapid growth of Amazon Web Services (AWS). AWS generated $21.4 billion in net sales throughout its latest quarter, improving 16% year-over-year and exceeding the Zacks Consensus estimate by 1.4% after two consecutive misses.
Image Source: Zacks Investment Research
Operating income within AWS took a hit throughout the latest quarter, reported at $5.1 billion vs. the year-ago figure of $6.5 billion due to higher expenses within the segment. The upcoming print will give us a better idea of AWS's profitability picture, a development that investors have closely watched amid tech spending headwinds.
Regarding our expectations, the Zacks Consensus estimate for AWS net sales stands at $21.5 billion, 9% higher than year-ago sales of $19.7 billion. Analysts have been modestly bullish for the quarter-to-be reported overall, with the $0.34 per share estimate up 3% since April and implying an improvement of 240% year-over-year.
Image Source: Zacks Investment Research
Alphabet
To the likes of investors, Google Cloud turned its first-ever profit in 2023 Q1, reporting revenue of $7.4 billion and reflecting year-over-year growth of 27%. The company has consistently exceeded the Zacks Consensus estimate regarding cloud revenue as of late, chaining together three consecutive beats.
Image Source: Zacks Investment Research
And for the upcoming release, our consensus estimate for Google Cloud revenue sits at $7.7 billion, implying growth of 22% and reflecting a slight cooldown relative to recent year-over-year sales growth rates.
In addition, many will be closely tuned into Alphabet’s advertising results and commentary on current spending trends within. We expect the tech titan to report $56.9 billion in ad revenue, reflecting a modest 1% improvement from the year-ago quarter.
Microsoft
In Microsoft’s latest Q3 release, cloud strength helped drive better-than-expected results, with Intelligent Cloud revenue growing 16% year-over-year to $22.1 billion.
Following the better-than-expected cloud results, CEO Satya Nadella said, “Across the Microsoft Cloud, we are the platform of choice to help customers get the most value out of their digital spend and innovate for this next generation of AI.” With AI being Wall Street’s shiny new toy, it’s reasonable to expect the company to spend considerable time discussing the technology in a cloud context.
For the upcoming release, the Zacks Consensus estimate for Intelligent Cloud revenue resides at $23.7 billion, suggesting an improvement of 13% from the year-ago quarter. Like those above, the company has been undergoing a slight cooldown regarding year-over-year cloud revenue growth rates.
Bottom Line
With big-tech earnings looming, many have turned focus to cloud spending trends.
And this week, we have Microsoft (MSFT - Free Report) and Alphabet (GOOGL - Free Report) on the docket, both scheduled to unveil quarterly results on Tuesday, July 25th, after the market’s close.
Next week, on August 3rd, we’ll hear from Amazon (AMZN - Free Report) .