I read through them carefully $Alphabet-A (GOOGL.US)$and $Microsoft (MSFT.US)$ the earnings reports and earning calls. This level of performance would normally be criticized by the market, but after the shocks from Snap, Walmart, and Shopify over the past few days, the market has been psychologically prepared for a miss, and is even relatively pessimistic about Q3 guidance. Today's earnings reports from Google and Microsoft have simply made the market realize that things aren't as bad as expected. Additionally, with tonight’s FOMC meeting outcome awaited, the market is looking for the Fed to endorse the peak in inflation, allowing it a chance to breathe easy.
A few key takeaways:
1) Google and Microsoft have significant global revenue exposure, with currency risk being relatively high within their industry. The impact of a strong US dollar on revenue and profits is around 5% and 3%, respectively. As countries proceed with interest rate hikes and expectations grow for US inflation to peak, Q3 might represent the strongest period for the dollar, and currency impacts should gradually ease starting in Q4.
2) Several pillars of the tech industry – content gaming, e-commerce, advertising, software cloud services, and semiconductors – are seeing mixed results. Currently, it seems they are primarily driven by consumer spending, particularly discretionary spending, which has been hit hard by inflation, making Q2 and Q3 difficult. However, corporate IT spending appears more resilient compared to consumer spending. In particular, semiconductor companies like Texas Instruments, which mainly focuses on analog chips, and Taiwan Semiconductor, known for logic foundry services, have both exceeded expectations...