Your Portfolios in Brief
Founded in 1975 by Bill Gates and Paul Allen, Microsoft Corporation is a company specialized in software, cloud services, productivity platforms, operating systems, and artificial intelligence. Present in more than 190 countries, it employs over 220,000 people worldwide. Its flagship products include Windows, Office, Azure, Teams, GitHub, and more recently, Copilot, its integrated AI assistant.
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Key Highlights in 2024–2025
• Annual Guidance: Microsoft provided a very strong forecast for fiscal year 2025. For the next quarter (June), the company expects revenue of $73.7 billion, an operating margin of 43.4%, and earnings per share of $3.34 — all above Wall Street’s estimates.
• Q3 FY2025 Revenue: Microsoft reported revenue of $70.1 billion, up 13%, exceeding the upper end of its own guidance range ($68.7B).
• Product Performance:
• Azure (Cloud): Growth of 35% in constant currency, driven by major contracts, including with OpenAI.
• Microsoft Cloud: Revenue up 20%, reaching $42.4B.
• Productivity and Business Processes (Office, Dynamics, LinkedIn): +10%, at $29.9B.
• More Personal Computing (Windows, Xbox, Surface): +6%, at $13.4B.
• Adjusted Earnings Forecast: Net income reached $25.8 billion, or $3.46 per share, up 18% year-over-year, beating the expected $3.22 per share.
• Operating Margin: Microsoft posted a record 45.7% operating margin, exceeding its initial forecast of 44.6%, reflecting exceptional cost management.
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Why This Is a Stock to Watch
Microsoft is one of the few technology stocks to combine sustainable growth, high profitability, and financial stability. Here’s why it is a cornerstone of our portfolio:
• Leadership in Artificial Intelligence: Through strategic investments in OpenAI, Microsoft integrates AI into all its products, from Copilot to Azure.
• Rapid Adoption of Hybrid Cloud: Azure has become a go-to solution for companies modernizing their digital infrastructure.
• Recurring Growth Through Subscriptions: Products like Microsoft 365, Dynamics, and GitHub generate stable, predictable cash flows.
• Ability to Outperform in Uncertain Environments: Despite trade tensions and global volatility, Microsoft’s revenue and guidance remain strong.
• Disciplined Management: Gross margins and capital expenditures are perfectly aligned to support growth without sacrificing profitability.
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Conclusion: Microsoft, a Strategic Pillar in Our Portfolio
At Pratte Porfolio Management, our decision to acquire Microsoft (MSFT) shares at their market low proved to be strategic. This approach, aligned with Warren Buffett’s philosophy of “being greedy when others are fearful,” allowed us to capitalize on a company with solid fundamentals and a forward-looking vision.
Microsoft continues to demonstrate exceptional resilience in the face of global economic uncertainty. Its massive investments in artificial intelligence — notably through partnerships with OpenAI and the development of Copilot — position the company at the forefront of digital transformation. Moreover, its sectoral diversification — spanning cloud computing with Azure, productivity software, and gaming — provides remarkable financial stability.
Analysts are unanimous: Microsoft boasts a “wide economic moat,” sustained growth, exceptional profitability, and a competitive advantage that is difficult to replicate. It’s a company that knows how to innovate without compromising financial discipline.
In short, Microsoft embodies a rare combination of growth, innovation, and solidity. Its presence in our portfolio reflects our commitment to identifying and holding the best long-term stocks. For serious investors, MSFT remains a must-own technology stock — one to buy and strengthen on weakness.
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Markets in Brief
Monday
• Dow Jones: [+0.28%] (40,227.59 points)
• S&P 500: [+0.06%] (5,528.75 points)
• NASDAQ: [-0.10%] (17,366.13 points)
• TSX (Toronto): [+0.36%] (24,798.59 points)
On the currency market, the Canadian dollar traded at an average rate of 72.84 US cents, up from 72.52 US cents the previous day.
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Eager Anticipation Before a Week Full of Earnings and Economic Indicators
North American markets moved without clear direction on Monday, as investors prepared for a crucial week marked by a wave of corporate earnings and macroeconomic data. Ongoing uncertainty surrounding trade negotiations with China also continued to weigh on sentiment.
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Stocks in Brief
Top gainers of the session
• Boeing (+2.44%): The stock surged after Bernstein’s analysts upgraded their recommendation to buy, citing a better posture than in 2023.
• IBM (+1.61%): The company announced a massive $150 billion US investment in the U.S. over five years, including $30 billion in R&D.
Top losers of the session
• Nvidia (-2.05%): The chipmaker declined after reports that Huawei is testing a competing AI chip.
• Amazon (-0.70%): Fell ahead of its quarterly earnings release.
• Microsoft (-0.20%): The stock pulled back as the company prepares to release earnings on Wednesday.
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Sector Performance
• Sector Up: Aerospace – Boosted by Boeing’s strong performance, the sector benefited from renewed analyst optimism.
• Sector Down: Technology – Giants like Microsoft, Nvidia, and Amazon came under pressure ahead of earnings, amid heightened volatility.
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Tuesday
• Dow Jones: [+0.75%] (40,527.62 points)
• S&P 500: [+0.58%] (5,560.83 points)
• NASDAQ: [+0.55%] (17,461.32 points)
• TSX (Toronto): [+0.36%] (24,888.12 points)
On the currency market, the Canadian dollar traded at an average rate of 73.01 US cents, up from 72.84 US cents the previous day.
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Optimism Revived by Imminent Trade Deal
North American markets rose on Tuesday, supported by comments from Commerce Secretary Howard Lutnick suggesting a major trade agreement was about to be concluded. Stocks tied to international trade reacted positively, despite ongoing tensions and a busy earnings season.
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Stocks in Brief
Top gainers of the session
• Honeywell (+5.40%): Quarterly results beat expectations despite lowered annual sales guidance.
• Coca-Cola (+0.78%): Despite revenue decline due to currency effects, net profit beat expectations.
• Apple (+0.50%): Shares gained ahead of Thursday’s earnings, benefiting from eased tariff concerns.
Top losers of the session
• General Motors (-0.64%): Announced a suspension of share buybacks and cautious guidance due to new tariff surcharges.
• Amazon (-0.17%): Pulled back after deciding not to display tariff surcharges on its Amazon Haul site, a move criticized by the White House.
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Sector Performance
• Sector Up: Industrial – Driven by Honeywell’s strong results, the sector benefited from renewed confidence in economic prospects.
• Sector Down: Consumer Discretionary – Amazon and GM’s caution over tariff impacts weighed on the entire sector.
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The Safe-haven Status of U.S. Treasuries Called into Question
Bond markets are being shaken by increasing doubts over the central role of the U.S. dollar and the traditional safe-haven status of U.S. sovereign debt. A combination of factors is fuelling this trend: international trade tensions, expansionary fiscal policy, persistent inflation, and perceived political instability, particularly tied to the Trump administration’s economic stance.
This environment is pushing investors to demand a higher term premium to hold long-term bonds, reflecting a perceived increase in sovereign risk. Several major international holders of Treasuries, including China and Japan, are quietly reducing their exposure and reallocating reserves toward tangible assets like gold.
This trend indicates a desire to diversify away from the dollar system. As federal deficits worsen, pressure on long-term rates intensifies, and confidence in the U.S. government’s ability to sustainably finance its debt is weakened. This situation could signal a structural shift toward a more multipolar monetary system, in which the U.S. would lose part of its historical financial dominance.
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The First 100 Days of Trump II Plunge Markets Into Uncertainty
The first 100 days of Donald Trump’s second term represent one of the worst starts for U.S. stock markets since the 1970s. The S&P 500 has lost nearly 8%, a drop comparable to Nixon’s 1973 era, marked by runaway inflation and political crisis. The swift imposition of tariffs on many goods — including steel, aluminum, and non-NAFTA products — has severely disrupted North American supply chains.
These measures have not only curtailed trade between Canada and the U.S., but also forced companies to overhaul growth plans, shifting focus to other markets. Amid these trade tensions, expectations for volatility in equities, bonds, and currencies surged in April. The VIX, Wall Street’s fear index, hit a five-year high, and futures markets suggest this uncertainty may persist.
The U.S. dollar also slumped, posting one of its worst performances over a 100-day period, reflecting growing investor skepticism toward U.S. assets. Despite a few positives like slowing inflation and major reinvestment announcements, the outlook remains dominated by uncertainty over trade, fiscal, and monetary policy. Businesses, investors, and trade partners are all being forced to rethink long-standing norms, in a landscape now defined by caution and fragmentation.
Beyond economic turbulence, Trump’s second term has also triggered a political backlash. It is the least popular presidential start in 80 years. This lack of support extends beyond public opinion into the business world and international partners, who are increasingly concerned by persistent instability. In an already fragile economic environment, this political weakness could further hinder the White House’s reform agenda and sap market confidence.
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Wednesday
• Dow Jones: [+0.35%] (40,669.36 points)
• S&P 500: [+0.15%] (5,569.06 points)
• NASDAQ: [-0.09%] (17,446.34 points)
• TSX (Toronto): [-0.13%] (24,841.68 points)
On the currency market, the Canadian dollar traded at an average rate of 72.40 US cents, up from 72.22 US cents the previous day.
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GDP Decline and Trade Tensions: a Volatile but Resilient Market
Wednesday’s session was volatile, shaken by an unexpected 0.3% contraction in U.S. Q1 GDP — the first decline in three years. This drop stemmed mainly from an exceptional 41% surge in imports, as firms rushed to stock up before new Trump tariffs took effect.
Core PCE inflation came in at 3.5%, well above expectations (3.2%) and the previous quarter (2.6%), complicating the Fed’s policy path. Despite these worrying figures, markets rebounded late in the session on hopes for renewed trade talks with China and strong tech earnings.
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Stocks in Brief
Top gainers of the session
• Meta (+3.3% after-hours): Earnings beat forecasts, EPS at $6.43, revenue at $42.3B driven by ads, and raised capex guidance.
• Mondelez (+3.78%): Annual targets maintained despite a sluggish Q1; supported by rising cocoa prices.
Top losers of the session
• Starbucks (-5.61%): Disappointing results due to slower consumer spending.
• Snap (-6.3% after-hours): Guidance for Q2 seen as weak despite strong operational quarter.
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Sector Performance
• Sector Up: Information Technology
Strong reports from Microsoft and Meta fuelled optimism in AI and cloud-related tech. Investors bet on their ability to grow despite macro volatility.
• Sector Down: Consumer Discretionary
Weighed down by Starbucks’s weak results and signs of slower household spending, this sector struggles in the current uncertain economic climate.
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Earnings Highlights
Microsoft: AI fuels revenue
Microsoft posted strong quarterly results: $70.1B in revenue (+13%), $25.8B in net income (+18%), and $3.46 EPS. Azure (cloud) grew 21%, and CEO Satya Nadella said 30% of code is now AI-generated — a major leap in automation.
Meta: Advertising and Solid Guidance Despite Tariffs
Meta beat expectations with $6.43 EPS and $42.3B in revenue (+16%). Ad revenues hit $41.4B despite trade tensions. The firm raised capex guidance to $114–119 B, reaffirming long-term growth via AI and platforms.
Snap: Solid Numbers Overshadowed by Weak Guidance
Snap reported 21% revenue growth to $1.19B, with 422M daily active users (+10%) and $0.03 EPS. However, Q2 revenue forecast of $1.23–1.26B missed estimates, weighing on shares post-market.
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Super Micro Computer Tumbles After Drastic Forecast Cut
Super Micro Computer (SMCI) plunged nearly 20% after slashing revenue and profit guidance for its fiscal Q3 ending March 31. Sales are now expected at $4.55B vs. $5.5B initially. Net income was also revised down due to inventory reserves and expedited shipping costs.
Management cited delayed buying decisions by customers, but analysts also point to potential moves toward competitors like Dell or HPE, amid tariff uncertainty on tech components. The stock, already down over 50% from recent highs, was harshly punished, reflecting investor doubts despite the firm’s strategic positioning in high-performance, liquid-cooled AI servers.
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Commodities
On the New York commodities exchange:
• Crude oil fell by $2.21 to close at $58.21/barrel
• Natural gas dropped 6 cents to $3.33 per million BTUs
• Gold dropped $14.50 to $3,319.10/ounce
• Copper retreated 26 cents to $4.61/pound
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Thursday
• Dow Jones: [+0.21%] (40,752.96 points)
• S&P 500: [+0.63%] (5,604.14 points)
• NASDAQ: [+1.52%] (17,710.74 points)
• TSX (Toronto): [-0.19%] (24,795.55 points)
On the currency market, the Canadian dollar traded at an average of 72.28 US cents, down from 72.40 US cents the previous day.
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Tech Rally Drives Wall Street Higher to Kick Off May
U.S. markets rose sharply on Thursday, lifted by strong earnings from Microsoft and Meta, which helped reignite optimism surrounding artificial intelligence. This bullish sentiment outweighed concerns over a weakening labour market, after weekly jobless claims unexpectedly rose to 241,000, well above estimates.
• Microsoft (+7.63%): Beat expectations with $70.1 billion in revenue and earnings of $3.46 per share, fuelled by strong Azure cloud growth (+35%).
• Meta (+4.23%): Reported $16.6 billion in ad revenue (+35%) and raised its capital expenditures to accelerate AI infrastructure investment.
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Stocks in Brief
Top Gainers
• Advanced Micro Devices (AMD) (+6.3%): Strong Q2 outlook, particularly in the data center chip segment, impressed investors.
• Meta (+3.7%): Continued rally following upbeat earnings and confidence in the company’s advertising momentum.
• CVS Health (+8.1%): Posted a quarterly earnings beat and raised full-year guidance.
• Nvidia (+2.47%): Benefited from Meta’s increased AI data center spending.
Top Losers
• Pfizer (-2.9%): Weighed down by disappointing COVID-related sales and lowered forward guidance.
• Comcast (-1.8%): Slipped after reporting slower growth in broadband subscriptions.
• Qualcomm (-8.92%): Despite beating Q1 estimates, cautious guidance spooked investors.
• McDonald’s (-1.88%): U.S. same-store sales fell 3.6%, a steeper decline than expected.
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Sector Performance
• Sector Gainer: Information Technology
Boosted by sharp gains in Microsoft, Meta, AMD, and Nvidia, the tech sector climbed over 2%, as optimism over sustained AI investment returned to the forefront.
• Sector Decliner: Healthcare
Dragged down by Pfizer, Eli Lilly, and Moderna, the healthcare sector slipped on concerns related to new FDA requirements and weaker-than-expected guidance from pharma companies.
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Commodities
On the New York Mercantile Exchange:
• Crude oil rose by $1.03 to settle at $USD 59.24 per barrel.
• Natural gas increased by 15 cents to $USD 3.48 per million BTUs.
• Gold dropped by $96.90 to $USD 3,222.20 per ounce.
• Copper gained 2 cents to $USD 4.63 per pound.
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Friday
• Dow Jones: [+1.00%] (40,948.62 points)
• S&P 500: [+0.70%] (5,608.04 points)
• NASDAQ: [+0.90%] (17,603.48 points)
On the currency market, the Canadian dollar traded at an average rate of 73.12 US cents, up from 73.01 US cents the previous day.
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Market Rebound Driven by an Encouraging Jobs Report
North American stock markets closed sharply higher on Friday following the release of a better-than-expected jobs report. The S&P 500 posted a ninth consecutive day of gains, which could mark its longest winning streak since November 2004.
Job creation reached 177,000 in April, exceeding forecasts (133,000), while the unemployment rate remained steady at 4.2%. Despite slower growth than in March, these figures helped ease recession fears fuelled by weaker recent economic data.
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Stocks in Brief
Top gainers of the session
• Microsoft (+1.2%): Continued post-earnings rally, driven by Azure growth and AI optimism.
• Meta (+1.6%): Continued to climb after strong results and an upward revision in capital investment.
• Amazon (≈0%): Better-than-expected Q1 results, despite cautious guidance impacted by tariff policies.
Top losers of the session
• Apple (-4.0%): Sharp decline after disappointing revenue in its services division and the announcement of $900M in additional costs linked to tariffs.
• Block (-20%): Steep drop after Q1 revenues missed expectations ($5.77B vs. $6.2B expected).
• Atlassian (-17%): Significant decline due to weak guidance for the upcoming quarter.
• Take-Two Interactive (-10%): Delay announced for the release of GTA VI, now scheduled for May 2026.
• Chevron (-2%): Quarterly results fell over 30%, impacted by falling oil prices and reduced share buybacks.
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Weekly Conclusion
The trading week ended on a decidedly positive note, marked by a series of strong quarterly earnings reports that largely exceeded expectations, particularly in the technology sector. These results, combined with a reassuring jobs report and continued upward momentum in several benchmark indices, demonstrated the resilience of the U.S. economy despite headwinds from trade tensions and political uncertainty.
The S&P 500 and Dow Jones posted a second consecutive week of gains, fuelled by optimism around artificial intelligence, sustained consumer activity, and relative stability in the labour market. While recession fears have not been fully eliminated, recent data has helped to restore investor confidence, highlighting the ability of companies to adapt in a complex environment.
In short, markets appear poised to cling to the prospect of sustained growth—provided that geopolitical and trade tensions do not disrupt this delicate balance in the weeks ahead.
