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Microsoft CEO warns of coming economic slowdown to impact stocks

Microsoft CEO Satya Nadella recently spoke about how much of a negative impact the slowing U.S. economy will have on stocks, particularly in the tech sector.

Video Transcript

- Let's get you up to speed now on big tech. Seana talked a lot about it there. What a difference a day makes for Microsoft. The stock down after it was, well, well up earlier in the day. But that was not the case when they released earnings Tuesday after the bell. That's when the stock rose 5% after hours initially after everyone jumped at what looked like a pretty solid report.

RBC analyst Rishi Jaluria telling us at the time the numbers were, quote, "better than feared." Then came the call to look under the hood at Microsoft. Revenue growth slowing to a six-year low. CEO Satya Nadella saying on the call organizations are exercising caution given the macroeconomic uncertainty. We got further guidance from their CFO Amy Hood who said, results weakened through December and should further slow in coming months.

Again, kind of a lesson to wait for that call. We will certainly analyze Tesla the second they come out and do our best. But you need to give it some time. And you need to hear that call before you truly analyze what it means for the next step, the next quarter, the next year.

- Yeah. Exactly. Or also what it could mean for some of its competitors out there because, initially, after Microsoft released earnings yesterday, when there was a lot of excitement about those numbers, particularly what we saw from the Azure from their cloud division, that actually sparked a bit of a rally in Amazon shares in extended trading yesterday. Of course, the reverse happened today with Amazon under pressure as well as a lot of the larger tech names or names focused on the cloud because of that guidance number, what we got from Microsoft in the earnings call.

Despite all this, despite the concern that we are seeing on the Street and despite the fact they were looking at some losses today. Although, you can see we're well off the lows of the day when you're taking a look at some of those larger tech names. The Street remains positive on Microsoft. Citi reiterating once again that Microsoft is, quote, "best positioned among large-cap software names, offering investors a good mix of growth and profitability." We also have Morgan Stanley maintaining that overweight rating there.

All right. Microsoft pulling the rest of the market down with it. You can see the Dow still in negative territory, though, well off the lows of the day. Looking at a two-day chart there in an intraday basis. We are now actually in positive territory in the final hour, trading up just about 17 points.