đź’° Microsoft & Google Earnings Review

1) Coca-Cola's Earnings Visualized 2) Microsoft's Earnings Visualized, 3) Alphabet’s Earnings Visualized, and more!

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It’s been a busy week.

Some of the biggest companies are reporting earnings this week. There’s a lot to dive into so let’s get right into it.

In today’s newsletter:

  • 🥤Coca-Cola Earnings Visualized

  • đź’» Microsoft Earnings Visualized

  • 🔎 Alphabet’s Earnings Visualized

Let’s dive right in!

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🥤Coca-Cola’s Earnings Visualized

Coca-Cola exceeded third-quarter expectations, posting earnings of $0.74 a share and revenue of $11.9B, surpassing estimates of $0.69 and $11.4B, respectively. The beverage giant witnessed a 2% rise in unit case volume, driven by growth in markets like Mexico, Japan, India, and the Philippines, and raised its full-year revenue and earnings guidance.

Despite Coca-Cola's price increases due to inflation, consumers continue to spend on beverages, showcasing the resilience of U.S. consumers. Meanwhile, concerns have arisen about the weight loss drug Ozempic reducing demand for food and beverage products, but RBC Capital Markets believes these fears are premature.

CEO James Quincey stated that U.S. inflation is decelerating and anticipates the company’s price increases to moderate further. However, currency translation is expected to impact the bottom line by 6% this year, a jump from the previously estimated 4-5%.

💻 Microsoft’s Earnings Visualized

Microsoft shares surged after surpassing Wall Street expectations, reporting earnings per share of $2.99 and a revenue of $56.5B, surpassing estimates of $2.65 and $54.5B respectively. The company's Intelligent Cloud segment experienced a 19% growth, producing $24.3B in revenue, and Azure's revenue alone jumped 29% during the quarter. Additionally, Microsoft's recent $68.7B acquisition of Activision Blizzard will play a role in next quarter's earnings.

The company is heavily investing in AI, with CEO Satya Nadella emphasizing its integration across the company’s tech stack. This commitment to AI has led to the launch of generative AI-powered Copilot apps for various Microsoft products, designed to boost productivity.

Microsoft previously indicated that AI would not yield significant results until after the start of 2024. However, Azure's growth is already being influenced by generative AI, helping to outpace expectations. Overall, the company anticipates a sales increase of up to 8.7% in the upcoming quarter, surpassing analyst forecasts.

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🔎 Alphabet’s Earnings Visualized

Alphabet, Google’s parent company, reported earnings of $1.55 per share and revenue of $76.7B, beating the FactSet consensus estimates of $1.45 and $75.9B respectively. However, shares declined by roughly 6% postmarket, likely due to slowed growth in cloud sales. Google’s cloud business reached $8.4B in revenue, falling short of the $8.6B expected.

Surrounded by intensifying competition in AI and cloud computing and facing global antitrust challenges, Google has been investing in generative AI to bolster its market position and counter rivals.

Google is strategically focusing on integrating AI into its search function, with its AI-powered Search Generative Experience currently available on an opt-in basis. CEO Sundar Pichai envisions evolving this feature over the next decade and ensuring its seamless integration with advertising opportunities.

Last month, Google confirmed its intentions to reduce several hundred positions within its recruiting sector, aligning with its ongoing cost-saving measures. This decision follows Alphabet's earlier action in January when it eliminated approximately 12,000 roles, or 6% of its total employees.

📡 Nokia Layoffs. Nokia $NOK will cut 14,000 jobs after a significant drop in third-quarter earnings due to industry challenges. [CNBC]

💉 More Pharma Tests. Novo Nordisk $NVO and Eli Lilly $LLY are testing GLP-1 weight loss injections on children, despite unknown long-term effects. [BI]

🍎 $1B AI Investment. Apple $AAPL is investing $1B annually to compete in generative AI and develop a smarter Siri. [BB]

🛒 New Costco CEO. Craig Jelinek, Costco's $COST CEO since 2012, will step down, with former forklift driver and current president Ron Vachris succeeding him. [FAST]

🏦 Banks Cutting Jobs. Major U.S. banks like Wells Fargo $WFC and Goldman Sachs $GS are cutting jobs due to economic pressures, while JPMorgan $JPM, on the other hand, continues to expand. [CNBC]

Notable Companies Reporting Earnings This Week:

  • Monday:

    • Cadence Design Systems $CDNS, Brown & Brown $BRO, Logitech $LOGI

  • Tuesday:

    • Microsoft $MSFT, Alphabet $GOOG, Visa $V, Coca-Cola $KO, Novartis $NVS, Texas Instruments $TXN, Verizon $VZ, Waste Management $WM, 3M $MMM, Spotify $SPOT, Snap Inc. $SNAP

  • Wednesday:

    • Meta Platforms $META, Thermo Fisher $TMO, T-Mobile $TMUS, IBM $IBM, ServiceNow $NOW, Boeing $BA, ADP $ADP, Moody’s $MCO

  • Thursday:

    • Amazon $AMZN, Mastercard $MA, Merck & Co $MRK, Linde $LIN, Comcast $CMCSA, Intel $INTC, UPS $UPS, Altria $MO, Ford $F

  • Friday:

    • Exxon Mobil $XOM, Chevron $CVX, AbbVie $ABBV, Charter $CHTR, Aon $AON

All of the companies that are reporting earnings this week can be viewed here.

Major Trades Published Week of 10/16. Trades may be those of family members. [Source: 2iQ]

Buys:

  • Michael McCaul (R)

    • Company: JPMorgan Chase & Co ($JPM)

      • Amount Purchased: $2M - $4M

    • Company: SAP ($SAP)

      • Amount Purchased: $200K - $400K

    • Company: Tapestry ($TPR)

      • Amount Purchased: $130K - $300K

  • Sheldon Whitehouse (D)

    • Company: Novartis ($NVS)

      • Amount Purchased: $15K - $50K

    • Company: Eli Lilly & Co ($LLY)

      • Amount Purchased: $15K - $50K

Sells:

  • Michael McCaul (R)

    • Company: JPMorgan Chase & Co ($JPM)

      • Amount Sold: $1M - $2M

    • Company: Citigroup ($C)

      • Amount Sold: $415K - $1M

    • Company: AT&T ($T)

      • Amount Sold: $115K - $300K

    • Company: Meta Platforms ($META)

      • Amount Sold: $100K - $200K

  • Pete Ricketts (R)

    • Company: Berkshire Hathaway ($BRKB)

      • Amount Sold: $100K - $250K

    • Company: Johnson & Johnson ($JNJ)

      • Amount Sold: $100K - $250K

    • Company: The Coca-Cola Company ($KO)

      • Amount Sold: $100K - $250K

  • James Vance (R)

    • Company: Walmart ($WMT)

      • Amount Sold: $50K - $100K

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Disclosure: I own shares of Alphabet ($GOOG) and Microsoft ($MSFT).

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