Mon Jan 27 12:00:00 UTC 2025: **Wall Street Jitters as AI Chip Sector Shakes, Microsoft Earnings Loom**
NEW YORK (January 26, 2025) – Futures markets experienced a significant downturn today, driven by a slump in Nvidia and other AI chip stocks following news of a Chinese competitor, DeepSeek, entering the market. This uncertainty casts a shadow over the upcoming earnings reports of several tech giants, including Microsoft, Tesla, Meta, and Apple.
Microsoft, slated to release its fiscal second-quarter results late Wednesday, is expected to show slower growth than previous quarters. Analysts at FactSet predict earnings of $3.11 per share on sales of $68.9 billion, representing a 6.1% year-over-year earnings increase and an 11.1% sales increase – the slowest growth in eight and six quarters, respectively. While Azure cloud computing revenue growth is expected to slow slightly to 30.2% year-over-year in Q2, analysts forecast a rebound to 31.7% in the following quarter, fueled by increased data center capacity.
Despite the projected slowdown, sentiment around Microsoft stock remains mixed. While some analysts, like Brad Sills of BofA Securities (buy rating, $510 price target), and Brent Thill of Jefferies (buy rating, $550 price target), are bullish on Microsoft’s long-term prospects due to its AI investments and partnerships with OpenAI, others express caution. Guggenheim’s John DiFucci maintains a neutral rating, citing concerns about the slow adoption of Microsoft’s Copilot AI services. TD Cowen’s Derrick Wood (buy rating, $475 price target) agrees, noting that the recent bundling of Copilot with Microsoft 365 suggests challenges in the initial pricing strategy.
Microsoft’s stock closed down 0.6% at $444.06 today, reflecting the broader market anxiety surrounding the AI sector and the company’s upcoming earnings report. The overall market uncertainty is likely to keep investors on edge until more clarity emerges from the upcoming earnings season.
First Piper 