Cramer's Morning Take: Microsoft & Alphabet 4/26/24

Jim Cramer (0:02)

I'm Jim Cramer, and you're about to hear a sample taken directly from today's CNBC Investing Club morning meeting.

Jeff Marks (0:09)

We had great earnings, big cap X numbers that are going to trickle through the rest of the economy, so you get a good rally.

Jim Cramer (0:17)

Yeah, I think it's important that you point out, Carl was interviewing me, and so I was talking about how we're the, frankly, the growth country in the world, and that's twofold. That's oil and gas, but it's cap equipment, and this capital expenditure. These are big checks made out to get Blackwells and H200 from, yes, NVIDIA.

Jeff Marks (0:37)

Yep, so let's talk about who's spending it. Maybe we'll start with Microsoft first.

Really clean beats.

Jim Cramer (0:42)

By the way, great notes last night.

Jeff Marks (0:43)

Yep, great, thank you. Clean beats across the board, revenue up 17%, EPS up 20%, beating expectations by 12 cents, operating margins better than expected. Well, look, I think with Microsoft, clean quarter, revenue guide may be a little bit light though the margins were good, and Azure, most importantly, better than expected, up 31%, seven points from AI services, which is OpenAI, chat, GPT.

Jim Cramer (1:09)

Seven points.

Jeff Marks (1:10)

Yeah, and even if you strip that out, XAI, Azure, revenue accelerated 24% constant currency, up 22% last quarter.

So great there, more personal computing. They're talking about PC volumes, better than expected.

Jim Cramer (1:24)

That could be good for Best Buy.

Jeff Marks (1:28)

And Copilot, they said 60% of the Fortune 500 is using the tool. Very good to see. CapEx was light, but they said fiscal year 2025 will be higher than 2024

Stock is down. I mean, look, relative to Alphabet, you had Alphabet, lower expectations, lower multiple, perhaps a bigger beat.

Jim Cramer (1:46)

Well, I mean, Alphabet, we have to understand that we've asked for granularity and we finally got it. We finally found out how they're doing and it turned out that they're doing really well, even other bets, even Waymo. They're doing incredibly well in YouTube. YouTube is the de facto way people, a lot of the younger people watch TV, hence what we do.

Jeff Marks (2:04)

Yeah, especially with YouTube TV, 8 million paid subs.

You had Search Beat, a lot of fears around Search just about the cannibalization, generative AI, disrupting that, but they actually think that the transition will be positive. So we'll see there. I like the fixing of the cost structure, margins expanded to 31%, big surprise, getting more discipline on cost.

Jim Cramer (2:25)

Right.

Jeff Marks (2:25)

Head count was down. Head count was down.

Jim Cramer (2:27)

Wasn't that amazing?

Jeff Marks (2:28)

And this comes even as they are investing aggressively in AI, CapEx came in 2 billion above expectations.

Jim Cramer (2:34)

Well, don't you think that when you read Microsoft and Google together, you know that there is, no doubt about it, how real the demand is for AI from these companies?

SPEAKER_3 (2:45)

Sure.

Jeff Marks (2:45)

I think AI monetization much clearer with Microsoft, but Alphabet has it too, and they talked about that as well.

Jim Cramer (2:55)

Start your day with my outlook on the daily market every morning at 10:20 a.m. Visit cnbc.com/morningtake to access all the benefits of being a CNBC Investing Club member.

SPEAKER_3 (3:10)

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Jim Cramer (3:52)

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