Tonight will be one of the most important evenings of the year for the tech market. Microsoft and Alphabet, Google's parent company, will publish quarterly results after the Wall Street close. A few hours earlier, at 2 p.m. New York time, the Federal Reserve will announce its rate decision. The market expects rates to stay in the 3.75% to 4% range.
Microsoft: Azure in dollars
This is Microsoft's first report under its new reporting structure, which for the first time shows revenue from Azure, its cloud service, in dollars rather than only as a growth rate. The company guided to 44% to 45% Azure growth in constant currency. Investors will also focus on capital spending, expected to exceed $50 billion for the quarter, and on how much of it is already turning into AI revenue.
Google: cloud and backlog
For Google, analyst consensus is about $127.8 billion in revenue. The figure likely to get the most attention is Google Cloud, whose order backlog is estimated at about $514 billion. Alongside that, Alphabet has guided to capital spending of $195 billion to $205 billion this year, a sum that weighs on its free cash flow.
Why it matters for Israel
Microsoft and Google are two of the largest employers in Israeli high-tech, with large R&D centers in Herzliya, Tel Aviv and Haifa. Google completed its acquisition of Wiz this year, and its Israeli cybersecurity operation is central to its cloud strategy. Beyond that, the giants' results set the mood for the entire tech stock market, and indirectly investors' appetite to fund Israeli startups. We will update when the results are out.
