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Luke Kawa1/29/25

Microsoft tumbles after its AI-enhanced cloud business fails to make it rain

Shares of Microsoft initially tumbled nearly 6% after its critical Azure cloud business brought in slightly less money than expected in the final three months of 2024. The stock since pared much of those losses.

The 31% growth (in constant currency terms) for that segment matched the lowest analyst’s estimate.

Adjusted earnings per share of $3.23, however, managed to beat the projected $3.12.

While AI may be additive to the company’s returns, that contribution wasn’t big enough or fast enough this quarter. Chairman and CEO Satya Nadella said that the firm’s AI business has an annual revenue run rate of $13 billion; AI tools added 13 points to Azure’s revenue growth this quarter, one percentage point better than the prior quarter.

These AI-linked outlays are poised to increase, management said.

“We expect capital expenditures to increase in coming years to support growth in our cloud offerings and our investments in AI infrastructure and training,” according to the 10-Q.

Separately, Microsoft is saying that DeepSeek ripped off OpenAI’s ChatGPT, but added one of those models to its cloud nonetheless.

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Tasha Matsumoto

Stocks notch new closing high, buoyed by end-of-war optimism and strong bank earnings

The S&P 500 and Nasdaq 100 both notched new record closes as President Trump said the Iran war was “very close to over” and as strong earnings from Morgan Stanley and Bank of America bolstered investor sentiment.

Michael Jordan holding trophy

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Matt Phillips9h

Oracle, Microsoft power battered software stocks toward best 3-day stretch in almost a year

Software shares are rising again early Wednesday, putting the widely watched iShares Expanded Tech Software ETF on track for its best three-day stretch in almost a year.

So far this week, Oracle is up more than 20%, Microsoft is up over 9%, and both ServiceNow and Datadog have gained more than 12%.

Intuit, CrowdStrike, Autodesk, and Atlassian were also among the software shares rising Wednesday after taking lumps on worries about AI disruption earlier this year.

Why the rebound? Mean reversion is a powerful force in markets, and some of these shares could simply be enjoying an overdue snapback.

Bloomberg suggests there’s some “bottom fishing” going on, with investors finally deciding that the price for these still highly profitable, cash flow-positive companies has fallen low enough to make them a compelling bargain.

Pat Tschosik, chief thematic strategist at research firm Ned Davis, told Sherwood News that the market may have been too panicky about software stocks as a whole, slamming the shares of software companies that could survive and thrive in the AI era along with those doomed to disruption.

Determining the difference between the winners and the losers will take a look at the fundamentals of individual companies.

“Somebody who does the homework is going to make a lot of money in these stocks,” he said.

Wall Street Goes Bottom Fishing in Beaten-Down Software Stocks

Wall Street Goes Bottom Fishing in Beaten-Down Software Stocks

So far this week, Oracle is up more than 20%, Microsoft is up over 9%, and both ServiceNow and Datadog have gained more than 12%.

Intuit, CrowdStrike, Autodesk, and Atlassian were also among the software shares rising Wednesday after taking lumps on worries about AI disruption earlier this year.

Why the rebound? Mean reversion is a powerful force in markets, and some of these shares could simply be enjoying an overdue snapback.

Bloomberg suggests there’s some “bottom fishing” going on, with investors finally deciding that the price for these still highly profitable, cash flow-positive companies has fallen low enough to make them a compelling bargain.

Pat Tschosik, chief thematic strategist at research firm Ned Davis, told Sherwood News that the market may have been too panicky about software stocks as a whole, slamming the shares of software companies that could survive and thrive in the AI era along with those doomed to disruption.

Determining the difference between the winners and the losers will take a look at the fundamentals of individual companies.

“Somebody who does the homework is going to make a lot of money in these stocks,” he said.

markets

Robinhood, Webull gain as SEC approves removal of day trading limit for small investors

Shares of Robinhood Markets and Webull are surging in premarket trading after the US Securities and Exchange Commission gave the green light to removing a rule that had impeded small traders from day trading.

The pattern day trading rule will no longer bar traders from making more than four day trades over a five-day period if their margin account has less than $25,000. The changes were initially proposed by the Financial Industry Regulatory Authority. Under the SEC order published Tuesday after the close of regular trading, all traders, regardless of account size, will just need to have enough in their margin account to cover their exposure.

(Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company subject to certain legal and regulatory restrictions.)

Allbirds, the quarter-zip of footwear, is leaving shoes behind to become an AI infrastructure company

Allbirds shares rocketed higher on Wednesday.

Max Knoblauch11h

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