Microsoft’s Earnings Rally May Not Be a Template for All Big Tech Stocks

Microsoft’s impressive earnings report and subsequent 9% stock jump shouldn’t lead investors to expect similar performance from other Big Tech companies, according to Josh Brown, CEO of Ritholtz Wealth Management. Speaking on CNBC’s ‘Halftime Report,’ Brown noted that Microsoft’s success ‘made everyone in every Nasdaq stock feel better’ due to its heavy investment in AI infrastructure, which rose 53% to $16.75 billion. This spending relieved concerns that cutbacks from hyperscalers would impact other AI companies. However, Brown warned against generalizing Microsoft’s results to the broader tech sector, describing the company as ‘uniquely positioned’ in the current technology revolution. ‘I think it’s a little bit dangerous to look around and say, ‘Oh, there are probably 500 other Microsofts.’ There aren’t going to be,’ Brown stated. Microsoft’s Azure cloud business drove the strong earnings, beating expectations in its fiscal third quarter and issuing surprisingly strong guidance. The Nasdaq Composite rallied over 2% following the report. While Microsoft has been a standout performer, other megacap stocks like Apple and Amazon have struggled this year, with shares down 15% and 13% respectively. Brown has highlighted alternative stocks that could outperform in the current market, such as Netflix and Spotify, the latter being one of his team’s ‘Best Stocks in the Market.’