Investing.com — The S&P 500 moved off lows Wednesday, as investors weighed up a slump in Alphabet against a rebound in Microsoft despite the latter’s mixed quarterly results and underwhelming outlook on growth ahead.
Microsoft Corporation (NASDAQ:MSFT) recovered intraday losses to trade flat after reporting quarterly results that beat on the top line, led by surprise strength in its cloud business, though revenue missed estimates and the company flagged a weaker outlook ahead.
Some on Wall Street, however, believe Microsoft’s cloud growth could reaccelerate sooner than expected, and the firm’s recent efforts to cut costs will begin to boost growth as soon as the fiscal fourth quarter.
“Microsoft’s expense efficiencies, meanwhile, will start to bear fruit in 4Q with continued tailwinds into FY24, we believe earnings and revenue growth could have troughed in F2Q23 followed by stability and potential re-acceleration towards the end of CY23, which is why we reaffirm our Buy rating and $315 PT,” Goldman Sachs said.
Semiconductor stocks, meanwhile, were kept in the red by a 1% fall in chip bellwether Texas Instruments Incorporated (NASDAQ:TXN) after the chipmaker misses quarterly revenue estimates, and guidance on earnings fell short of analysts’ estimates.
“TXN confirmed that all segments (ex-auto) were weak in 4Q and were expected to weaken further in 1Q as customers reduce inventory,” Credit Suisse said in a note. “[P]otential incremental margin headwinds keeps us on the sideline as we await more detail from next week’s call,” it added.
Financials were also a source of support for the broader market’s move off session lows as sentiment on regional banks was boosted by a surge in U.S. Bancorp (NYSE:USB) on better-than-expected fourth-quarter earnings.
In other earnings news, AT&T Inc (NYSE:T) delivered quarterly results that beat on the bottom line as the telecommunications company racked up more wireless subscribers than expected in the fourth quarter.