Investors are eagerly awaiting the quarterly results from tech behemoths Alphabet (GOOGL) and Microsoft (MSFT) this week, alongside Tesla (TSLA) and Meta Platforms (META).

Quarterly Expectations

Alphabet is expected to see a 27% increase in Q1 earnings to $1.49 per share, with a projected 14% rise in sales to $66.02 billion. The company has a track record of surpassing earnings expectations, indicating a strong performance in the market.

Microsoft’s Outlook

On the other hand, Microsoft is forecasted to post earnings of $2.81 per share for the current fiscal third quarter, reflecting a solid 14% year-over-year growth. The company has consistently exceeded EPS estimates for six consecutive quarters, showcasing its stability and potential.

Performance & Valuation Comparison

Both Alphabet and Microsoft have seen positive stock growth, with Alphabet up 13% and Microsoft up 8% year to date. The companies have surged over 40% in the last year, outperforming major market indexes.

Valuation Analysis

Alphabet appears more appealing in terms of P/E valuation, trading at a multiple of 23X compared to Microsoft’s 34.5X. Alphabet also maintains a discount compared to its historic median P/E ratio, indicating potential undervaluation.

Earnings Estimate Revisions

While earnings estimates for Alphabet have remained stable with some upward revisions, Microsoft has experienced slight decreases in estimates for the current quarter and FY24. This differential trend may impact investor sentiment.

Final Thoughts

Alphabet holds a Zacks Rank #3 (Hold) while Microsoft is ranked at #4 (Sell). The divergence in their ranking highlights the varying market perceptions towards these tech giants, influenced by earnings revisions and valuation metrics.

Investors should carefully weigh the financial metrics and market outlook before making any investment decisions.