👀 Microsoft and Alphabet unveiled their results

What’s going on here?

Microsoft announced better-than-expected results late on Tuesday, and impressed investors will likely be seeing stars – or more aptly, primary-colored clouds.

What does this mean?

Microsoft’s stock price has hopped up by nearly 20% this year, so the bar for this round of results was set high. But the software heavy-hitter cleared that and more, posting revenue and profit that easily glided over expectations. See, despite being far from peak fitness, the firm’s personal computing business – which features ChatGPT-powered Bing – posted a smaller drop than expected. And sure, Microsoft had already forecast that growth for its crucial cloud computing business Azure would slow to around 26% versus last year – but investors feared it’d be worse. No wonder, then, they cheered Azure’s 27% growth, initially sending the shares 4% higher after hours.

Why should I care?

Zooming in: Reach for the clouds.

The word “Azure” might refer to the color of a bright blue sky, but Microsoft’s future will likely be full of heavy clouds – a perfect forecast in the firm’s eyes. Consulting firm Gartner estimates that companies will funnel over half of their IT spending into cloud technology come 2025, and that chunk could be even higher if artificial intelligence (AI) really takes off. No wonder, then, that investors are laser-focused on Azure’s performance: the cloud business will dictate the firm’s stock price for some time to come.

The bigger picture: Not-so-problem child.

Investors could breathe a second sigh of relief when Google-parent Alphabet reported results on Tuesday too: YouTube – the firm’s current problem child – reported better-than-expected advertising revenue, and the firm announced a whopping $70 billion stock buyback. But with Alphabet’s core advertising business buckling under the weight of economic pressures, investors are firmly focused on the firm’s growth plans. Specifically, how it’ll catch up to its rivals’ artificially intelligent initiatives.

What’s going on here?

UBS reported results on Tuesday for the first time since its rushed takeover of Credit Suisse.

What does this mean?

UBS’s stock price has been sitting pretty ever since the firm bought Credit Suisse, in what was either a forced buyout or the deal of the century. So it was a shock when the mammoth investment bank revealed that its first-quarter profit was down 52% from the same time last year, even if that was partly down to the $665 million it put aside to cover a drawn-out legal battle. On the plus side, clients popped $28 billion into UBS’s wealth management division. Mind you, Credit Suisse reported on Monday that it lost $69 billion during its embattled first quarter – and when you add those together, the future Swiss megabank is still bleeding cash.

Why should I care?

For markets: Not-so-low-hanging fruit.

Squishing two supersized firms together is hard in any industry, but UBS has an extra tricky task on its hands with Credit Suisse. Just do the math: banks hire a lot of workers, and mergers mean job losses. Those layoffs can really crush morale among the remaining number crunchers, and loyal cash-rich clients often follow their departing bankers or take their business elsewhere out of principle.

Zooming out: Timing’s everything.

The old adage of “time in the market’s better than timing the market” is sound advice most of the time – but the saying doesn’t always ring true for bank stocks. Take UBS: today’s share price is the same as it was in 2018, 2015, 2013, and 2008, but the stock bounced between 10 and 20 Swiss Francs a number of times in between. So without a knack for timing, bank stocks could leave you feeling pretty flat.