Alphabet, Microsoft Lower On Q3 Earnings; Chipotle Beats

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Markets continued their relative strength off late September/mid-October lows, spinning gains in the regular session ahead of a heavy afternoon of earnings releases. The Dow closed +337 points, +1.07%, while the S&P 500 performed even better, +1.63%. Better still were the tech-heavy Nasdaq and small-cap Russell 2000, +2.25% and +2.83%, respectively.

This is one of those afternoons we keep our heads down and report the slew of earnings numbers hitting the tape late. We’ll get a better perspective to analyze the data once we’ve weathered the tech-stock earnings storm, which picks up in a big way this week.

Google-parent Alphabet (GOOGL - Free Reportreported misses on both top ands bottom lines this afternoon, with earnings of $1.06 per share light of the $1.25 in the Zacks consensus, on revenues of $57.26 — minus traffic acquisition costs (TAC), which the company does not subtract on its top-line figure; the company posted $69.09 billion — which was short of the $58.26 billion expected.

The company said this quarter reported the slowest quarterly revenue growth since 2013. Its Cloud business brought in $6.87 billion, a bit higher than expected, while its YouTube, at $7 billion in the quarter, was lower than analysts were looking for. This was the second quarter in a row of slowing YouTube revenue growth. Shares in late trading are -5% at this hour.

Microsoft (MSFT - Free Report), on the other hand, posted slight beats on both top and bottom lines Tuesday afternoon: earnings of $2.35 per share outpaced the Zacks consensus by 6 cents per share, while sales of $50.12 billion in the quarter slipped past the $49.47 billion expected. Its shares are selling off -1.3% on the news, however, on Azure growth of +35%, which was slimmer than anticipated.

Chipotle Mexican Grill (CMG - Free Reportonce again outperformed expectations on its bottom line: earnings of $9.51 per share beat consensus by 40 cents — although this did not represent a one-time charge of roughly $3.5 million. Revenues were a sliver light: $2.22 billion versus the estimated $2.23 billion, though same-store sales were slightly better than expected: +7.6% year over year. Guidance on comps is currently for mid-single-digit growth. Shares are +4% in the after-market.

Texas Instruments (TXN - Free Reportbeat both top and bottom-line estimates in its Q3 report released this afternoon — earnings of $2.47 per share versus $2.37 expected, on sales of $5.24 billion versus $5.11 billion consensus. But shares are trading down -5% on weaker guidance next quarter on both earnings and revenues. Personal electronics and Industrial chips is believed to provide headwinds in the coming quarters.

Quickly, after kicking off Q3 earnings season with big banks enjoying higher interest-rate payments and airlines cashing in on pent-up demand — leading to a better-than-expected early segment of Q3 — we’re getting into the tough slogging now: chips-makers, cloud service providers, etc. How these companies perform relative to each other likely will reflect management techniques, but they are all passing through difficult economic conditions.


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Microsoft, Alphabet Miss; Chipotle, T.I. Beat in Q2

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