- Tesla’s correction could offer an entry point, but its future hinges on ambitious plans for 2025.
- Microsoft’s strong earnings mask concerns over AI spending and competition, posing risks to short-term growth.
- With both stocks at critical junctures, their next moves could reveal whether the market sees long-term potential or challenges.
- Are you looking for actionable trade ideas to navigate the current market volatility? Unlock access to InvestingPro’s AI-selected stock winners using this link.
This week stands out as a pivotal moment in the U.S. earnings season, with the spotlight on the "Magnificent Seven." Tesla (NASDAQ:TSLA), Microsoft (NASDAQ:MSFT), and Meta (NASDAQ:META) reported their earnings yesterday, while Apple (NASDAQ: NASDAQ:AAPL) is set to reveal its results today.
As we sift through these reports, Tesla and Microsoft stand at different ends of the spectrum. Tesla's earnings came in below expectations, while Microsoft exceeded forecasts.
Yet, the market's immediate reaction has been muted, with stock price movements limited to just 4-5%—a contrast to the volatility we’ve come to expect from these stocks, especially Tesla, which often sees moves over 10%.
With some key earnings reports already in, let’s dive into two big tech stocks worth considering right now.
1. Tesla: A Potential Buying Opportunity?
Tesla’s latest quarterly results missed expectations, and the company has now posted its first annual sales decline for 2024. Despite this, Tesla’s management remains optimistic, forecasting a rebound in 2025, driven by the launch of a new low-budget model. Investors are also keeping an eye on the company’s autonomous vehicle projects and potential tariffs on Chinese competitors, which could play in Tesla’s favor.
Source: InvestingPro
As of now, analysts remain bullish on Tesla with a price target of $318.5, according to InvestingPro.
Looking at Tesla's stock price, we see a correction nearing the demand zone around $360 per share. This level could offer a strong buying opportunity if the stock bounces back. However, if it breaks below this level, the next support is at $320 per share. Notably, Tesla’s stock is showing a slight rise in after-hours trading, which reduces the likelihood of a short-term dip to the $360 range.
2. Microsoft: Post-Earnings Dip Extends
Microsoft’s earnings exceeded market expectations for both revenue and earnings per share, but the market reacted with a decline in after-hours trading, losing more than 4%. This drop can be attributed to slightly weaker-than-expected results in Smart Cloud and Microsoft Cloud revenue, as well as a surge in AI spending, which rose 175% year-on-year to over $13 billion. While the company’s AI investments are clearly paying off, they also face increased competition, particularly from the new Deepseek tool launched in China for a fraction of Microsoft’s own investment in ChatGPT.
Source: InvestingPro
As of now, analysts remain bullish on Microsoft with a price target of $509, according to InvestingPro.
Source: InvestingPro
Despite the strong earnings report, Microsoft’s stock remains in a $455-410 per share consolidation range, with the potential for another test of the lower boundary. If the stock breaks below this range, the next support level is near $385 per share.
Investors should keep an eye on this potential breakdown as it could signal an opportunity to enter at a lower price point.
Bottom Line
Both Tesla and Microsoft offer compelling opportunities post-earnings, but their trajectories will depend on how they navigate the challenges ahead. Whether you’re looking to buy into a potential correction or position yourself for a future AI boom, these stocks are definitely worth watching closely.
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Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk belongs to the investor. We also do not provide any investment advisory services.