Fast Money Blog- 4/26/24
It was quite a topsy-turvy week on Wall Street, as U.S. economic news, the war in Israel, and the earnings releases of some of our favorite Wealthy Investor stocks, converged.
On Thursday, April 25th, Gross Domestic Product data was released that showed the U.S. economy continued to grow, but at a sharply slower rate. GDP increased 1.6% for the quarter, down from 3.4% from last quarter.
This slowdown in the economy is coming at the same time that the Fed’s fight against inflation has stalled, as shown from the Personal Consumption Expenditures price index, which rose at 3.4% for the quarter, up from 1.8% from last quarter.
This slower than expected growth coupled with higher than expected inflation caused the Dow Jones Industrial Average to drop significantly during Thursday’s trading hours.
However, after market close, both Alphabet, Inc. (GOOG) and Microsoft Corporation (MSFT), posted outstanding earnings, showing that their investments in A.I. are beginning to have results.
Let’s Take A Closer Look at Google
GOOG reported stellar Q1 2024 earnings with top-line revenue of $80.54 billion, up 15% year-over-year. This marked the fastest rate of growth since early 2022.
Here’s how the company’s quarterly revenue broke down:
Google’s cloud revenue grew 28% year-over-year, taking in $9.57 billion in the quarter. In the first three months of the year, Google’s cloud unit brought in an operating profit of $900 million. I
Google’s advertising revenue rose 13% to $61.66 billion, with YouTube ad revenue rising 21% to $8.1 billion.
More excitingly, the company also announced its first dividend (20 cents per share quarterly) and a $70 billion buyback.
This new dividend is great news for members of the Wealthy Investor program.
Now Let’s Look at Microsoft
MSFT released sensational Q3 2024 earnings with revenue of $61.85 billion, up 17% year-over-year.
Some Highlights
Microsoft’s Intelligent cloud segment had quarterly revenue of $26.7 billion, up 23% year-over-year. This segment represents 43.2% of total revenues.
The Productivity and Business Processes segment, which includes Dynamics, LinkedIn and the Office suite of products, brought in $19.6 billion, an increase of 12% year-over-year. Microsoft 365 Consumer subscribers grew to 80.8 million.
The company also reported revenue of $15.6 billion, an increase of 17% year-over-year, in their More Personal Computing segment. Windows revenue for the quarter increased 11% year-over-year.
Overall Microsoft Gaming revenue increased 51% year-over-year, but 55% of that increase came from their acquisition of Activision-Blizzard. In other words, gaming would actually be down 4% without all that Call of Duty revenue now pouring in.
To sum it all up, GOOG and MSFT remain dominant players in advertising, search and cloud services. These companies make great short term trades as well as long-term holds.
Though the market overall is concerned about rising interest rates, most of our long-term Wealthy Investor holds are in great shape.
Over the next 52 weeks I believe the market as a whole will rise.
Stay patient, stay smart and stay open!
Tyrone Jackson, The Wealthy Investor