It has been pretty rare for the Dow Jones Industrial Average (^DJI 0.40%) to take a leadership role in the stock market lately. Many investors have focused instead on major market benchmarks with more of a concentration in high-growth stocks rather than the tried-and-true, mature businesses that make up the 30 constituents of the Dow.
On Wednesday morning, though, the Dow looked as if it were on pace to outperform its peer stock indexes. Much of the strong relative performance came from two stocks: Microsoft (MSFT 1.82%) and Boeing (BA 0.25%), both of which released their latest financial reports over the past 24 hours. Here, you'll get a closer look at what Microsoft and Boeing said and what the future could bring for these two giants of their respective industries.
Microsoft keeps riding AI's coattails
Shares of Microsoft were up more than 4% in premarket trading Wednesday morning. The software giant released its fiscal first-quarter financial report for the period ended Sept. 30, and investors saw all the positive news they wanted about Microsoft's forays into artificial intelligence (AI) and other high-growth areas.
Overall, Microsoft had a strong quarter. Revenue climbed 13% year over year to $56.5 billion. Net income was higher by 27% from year-ago levels, weighing in at $22.3 billion. That produced earnings of $2.99 per share, which was better than most of those following the software giant had expected.
The same general trends that have supported Microsoft's business for quite a while now continued in the summer months in 2023. Revenue from Microsoft's intelligent cloud unit grew at a faster pace of 19%, with the Microsoft Azure platform and other cloud services revenue rising 29% from year-ago levels. The productivity and business processes segment, which includes key products like Office, LinkedIn, and Microsoft Dynamics, grew its sales by 13%. Lagging behind was the personal computing segment, where Windows revenue was up just 5% and sales of devices fell sharply.
CEO Satya Nadella continued to double down on AI, talking about how Microsoft is incorporating new AI features into all of its major products, including Windows and Office. With its partnership with OpenAI, Microsoft has the inside lane in AI development, and shareholders like how the Redmond-based company is exploiting its competitive position to its advantage.
Boeing gains altitude
Meanwhile, shares of Boeing rose 3% early Wednesday. The aircraft manufacturer reported third-quarter financial results that actually fell short of expectations in some areas, but shareholders overall seemed to be comfortable with the company's performance.
Boeing's income statement was far from pristine. Revenue of $18.1 billion was up 13% year over year. Boeing continued to lose money, posting net losses of $1.64 billion, but that amount of red ink was down by roughly half from year-ago levels. On a per-share basis, adjusted losses amounted to $3.26 per share.
Boeing blamed the performance on reduced delivery volume of its key 737 aircraft line, as well as poor performance in its defense segment. Yet despite those near-term challenges, Boeing CEO Dave Calhoun said that the company still expects to meet its annual financial goals. Efforts to improve quality control and make its supply chain more stable should pay dividends not just now, but years down the road.
Investors are pleased that Boeing still anticipates getting production levels back up to historical norms in the coming years, even though a problem with certain 737 aircraft will hurt delivery volumes in the short run. If success with the wide-body 787 Dreamliner can continue, then it will go a long way toward offsetting any ongoing issues with the rest of Boeing's fleet.
