Microsoft and Alphabet collapse 6% after their results



Investing.com – Shares of Alphabet (NASDAQ:) and Microsoft (NASDAQ:), two of the world’s largest technology companies, tumbled more than 6% in aftermarket trading last night after the publication of quarterly results which were considered disappointing.

Alphabet, the parent company of Google (NASDAQ:), reported EPS of $1.06 vs. $1.25 expected, for revenue of $69.09 billion, vs. $70.58 billion expected. Microsoft reported EPS of $2.35 vs. $2.3 expected and revenue slightly above expectations at $50.12 billion, but disappointed with its conservative forecast.

Microsoft is indeed forecasting revenue of $52.35-53.35 billion for the second fiscal quarter, implying 2% growth, while analysts on average were anticipating a forecast of $56.05 billion. dollars.

These disappointing quarterly results complete a worrying start to the earnings season. Last week, Snap Inc. (NYSE:) reported disappointing results and said it was unable to provide guidance given volatile spending and concerns about the economy, prompting a Friday.

The next release to watch will be from Meta Platforms Inc (NASDAQ:), Facebook’s parent company, which is due to report earnings this Wednesday evening. Analysts expect a second straight quarter of revenue decline.

Should we buy Alphabet and Microsoft shares in the face of the plunge for this Wednesday?

As highlighted above, shares of Alphabet and Microsoft plunged after trading yesterday following their results, and should in all likelihood confirm their declines in regular trading on Wednesday. The question therefore arises whether to take advantage of this to buy.

Beyond the fact that these are two absolutely dominant companies in their respective fields, in industries whose long-term prospects are not to be questioned, it should be noted that analysts remain optimistic for the two technology stocks. .

Upside potential of +38% for Microsoft, +43% for Alphabet according to analysts

As for Microsoft, almost all of the 50 analysts who follow the action, more precisely 48, advise the purchase. The other two have a neutral opinion. Separately, these analysts’ average 12-month target is $323.78, representing more than 38% upside potential from the stock price at the close of after-market trading last night. .

In the case of Alphabet, the opinion of analysts is just as positive, with 48 analysts out of 51 recommending buying the stock, and 3 displaying a neutral opinion. Additionally, these analysts’ 12-month average target of $139.92 suggests a potential gain of 43% from last night.

Buy signal confirmed by Alphabet and Microsoft valuation models

Finally, note that the valuation models also show that the fall in Microsoft and Alphabet shares could prove to be a buying opportunity.

Indeed, the InvestingPro fair value of Microsoft stock, which synthesizes several financial and accounting valuation models, stands at $285.24, representing an upside potential of nearly 20%. For Alphabet, the fair value comes in at $136.73, about 40% above the current stock price.

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