Wednesday, Moscow time: 21:00 - Fed rate decision, 21:30 - Jerome Powell's press conference, 23:00 - US market close, 23:30 - Alphabet conference call, 00:30 - Microsoft conference call. The company confirmed the date on October 7.
FactSet consensus: revenue of $90.63 billion and adjusted earnings of $4.71 per share, up 16.7% and 14% year over year and at the upper end of Microsoft's own guidance ($89.85-90.95 billion). On Friday, October 23, MSFT closed at $524.51 (+0.66%).
The key figure of the evening is Azure growth (Microsoft's cloud division). Company guidance: 44-45% year over year in constant currency. A quarter ago they reported 43%, but after a methodology change the same quarter was recalculated at 42%, so a direct comparison isn't possible. Tal Liani of Bank of America expects 44.8% and about $32.3 billion in Azure revenue.
Capex: CFO Amy Hood warned back in July that for the quarter it would exceed $50 billion versus ~$41 billion in June. Part of the amount is a change in lease accounting, not actual cash.
The tech index enters the week after -0.7% over five sessions. Scenarios for the evening:
▫ figures and Powell's tone in line with expectations - the move fades within the session;
▫ Azure or guidance for the December quarter diverges from the target - the gap in MSFT after the close drags the Nasdaq futures with it.
Have you seen earnings gaps on MSFT?
The evening of the report looks like this: you look at the chart, calculate the stock's move and see that your lot makes little difference. At $524 a share, it's no longer about the forecast but about the size of the account. In prop trading, the trading notional is provided by the prop firm itself: you pass the evaluation phase and trade its account for a share of the profit. It makes more sense to understand the mechanics before Wednesday.