Microsoft (MSFT) shares are trading more than 6% lower after the close, following the companies. Latest earnings report.
For the quarter, Microsoft beat earnings per share by a penny after reporting revenue that was in line with expectations. The company’s revenue strengths came from the personal computing segment while Aure and other cloud computing services came in slightly lower than the company’s guidance.
The highly watched Intelligent Cloud segment of Microsoft’s business did beat the company's expected revenue slightly.
The initial reaction to the company’s earnings report may change after the conference call set for 5:30 P.M. Analyst expectations have been running high for all of the AI-related companies, meaning that any updates to the company’s outlook will provide another catalyst for after-hour and Wednesday’s trading.
Tomorrow’s trading activity for Microsoft will be critical as the stock is currently trading slightly below the $400 price level.
This price level serves not only as a significantly psychological round-numbered price, but is also the site of the stock’s 200-day moving average.
A move below the stock’s 200-day moving average would serve to increase selling pressure and likely target further declines to $385 which is where Microsoft shares were able to form a bottom in May. The stock’s May bottom was well above the stock’s 200-day moving average meaning that a break of this price would result in a target of $350.
For the third day in a month, NVIDIA (NVDA) stock has dropped more than 6%.
The AI semiconductor leader has now shed more than 25% from its all-time highs posted on June 20th as investors are clearly taking profits. The profit-taking has been sparked by fears that the large cap technology names had stretched their valuations too high, potentially inflating an AI Bubble.
After the close on Monday, Apple announced that it had been using Alphabet’s (GOOGL) semiconductor chips for their AI models. Alphabet shares traded higher on Tuesday after that news.
Also working against NVIDIA, recent inflation data has come in better than expected, putting the Fed on course for a likely interest rate at its next meeting in September.
Investors will be watching the Fed’s comments closely tomorrow for confirmation, which would likely put more pressure on large cap technology stocks through the summer.
From a technical perspective, NVIDIA shares broke through key trendline support last week as the stock moved below its 50-day moving average. That trendline currently sits just below $120, which had also served as price support for the stock.
The next round of support for NVIDIA stock sits at the psychologically significant $100 level.
Options traders have been focusing on the stock hitting support at $105 as the August and September put options at that strike have seen an increase in activity.
PayPal (PYPL) shares closed today almost 9% higher after the company beat earnings expectations this morning.
The company announced earnings of $1.19 versus a consensus estimate from Wall Street that was $0.99. PayPal also beat their revenue goal showing top line growth of 8.2% compared to the same quarter last year.
On the conference call, Paypal's management guided next quarter's earnings higher. While maintaining revenue guidance for the quarter. The company’s investment in branded payment and one click checkout continues to pay off, despite strong competition from Alphabet and Apple (AAPL).
Despite the outstanding earnings report, Paypal shares continue to trade in a long-term bear market trend. The stock shifted into this trend in late 2021 and has failed to break out after losing more than 75% of its market cap value.
Investors should mind the stock’s $60 level as a warning sign that long-term investors are using the earnings report to sell into the stock’s recent strength.
The stock remains neutral to bearish with a target of $60.
