Texas Instruments, Microsoft Figures Serve As Warning For Investors

Tech earnings season has arrived, potentially throwing a wrench in the works of the sector’s strong start to the year. With fourth-quarter earnings revised lower across the board, there is plenty of scope for upside surprises this season.

Photo Insert: Texas Instruments beat earnings expectations but flagged a “weaker than seasonal decline” in demand for the March quarter.

Microsoft’s strong results were an example of that, Callum Keown reported for Barron’s.

But the market is more interested in what lies ahead in the coming months, highlighted by the tech giant’s disappointing guidance and the stock’s sharp reversal late Wednesday.

It was a similar story for Texas Instruments, often seen as a tech bellwether. The chip maker beat earnings expectations but flagged a “weaker than seasonal decline” in demand for the March quarter.

Tech earnings are only just getting started but Microsoft and TI could offer clues to what’s ahead when the likes of Alphabet, AMD, and Amazon report next week.

The sector, and in particular Big Tech, has started 2023 with a bang—the technology-heavy Nasdaq Composite has climbed more than 8% already this year. But the first batch of earnings looks to be putting stocks under pressure Wednesday.

Economic data toward the end of the week, particularly Friday’s PCE inflation reading, have the potential to alleviate some of that pressure if they point toward the Federal Reserve pausing rate hikes in the not-too-distant future.

However, the deluge of tech earnings next week will have investors scrambling to digest the health of the sector. The fourth quarter may well positively surprise but beware of the guidance.

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