Cloud Breakout Battle: Microsoft Breaks Out Before Google, Amazon With Earnings Due

Cloud Breakout Battle: Microsoft Breaks Out Before Google, Amazon With Earnings Due

Cloud Breakout Battle: Microsoft Breaks Out Before Google, Amazon With Earnings Due

With earnings due Oct. 26, Microsoft (MSFT) joins cloud computing giant Alphabet (GOOGL) on IBD Leaderboard. Fellow top tech stocks Nvidia (NVDA), ServiceNow (NOW) and Advanced Micro Devices (AMD) also make this list of leading stocks to buy and watch.




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MSFT stock was featured in this column on Sept. 27 as what it calls the “Great Reshuffle” continues to drive hybrid work trends — a mix of work-at-home and in-office environments. Along with fellow cloud giant Amazon.com (AMZN), Microsoft and GOOGL stock continue to tap into these long-term trends. The tech trio dominates cloud computing through Amazon Web Services (AWS), Microsoft Azure and Google Cloud.

With long-term track records of stable earnings growth, Microsoft, Alphabet and ServiceNow all earn a spot on IBD Long-Term Leaders.

Earnings Estimates: Microsoft Vs. Alphabet And Amazon

While Nvidia doesn’t release its next earnings report until mid-November, Microsoft and Alphabet report next week. Amazon reports Oct. 28.

After posting a 49% EPS increase last quarter, analysts expect Microsoft’s growth to slow to 14% in Q3. For 2021, Wall Street sees the cloud, software and video game giant generating 10% earnings growth.

Coming off a 189% EPS spike in Q2, analysts see Google parent Alphabet posting 65% growth in Q3. For the full year, consensus analyst estimates call for a 92% increase in earnings.

In terms of Q3 estimates, Amazon lags its fellow cloud giants, expecting a 28% decline in EPS growth after a 47% increase in Q2. But Wall Street sees Amazon full-year 2021 growth coming in at 26%.

MSFT Stock Wins Cloud Competition To Break Out First

With earnings due the same day, MSFT stock broke out Monday volume that came in below average. Its relative strength line hit a new 52-week high.

GOOGL stock is nearing a potential buy points as AMZN stock moved higher for a fifth straight day as it continues to base. All three cloud stocks are now above their 10-week moving averages.

Microsoft cleared a 305.94 buy point in a second=stage base. GOOGL stock has also formed a flat base in its third-stage chart pattern with a 2,925.17 entry.

As the stock market indexes build on a new uptrend, keep an eye on the RS line. Microsoft’s rising relative strength line shows it is outperforming the general market as it breaks out. Amazon’s RS line is also perking up.

The focus, of course, for all three stocks right now is on upcoming earnings. While it’s risky to buy a stock just before it reports, a strong earnings report in a rebounding market has the potential to lift Microsoft, Alphabet and Amazon solidly into new buy zones to match their lofty cloud ambitions.

Follow Matthew Galgani on Twitter at @IBD_MGalgani.

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