FirstFT: Microsoft and Alphabet results boost Wall Street hopes

Results from Google parent Alphabet and Microsoft yesterday have fed hopes on Wall Street that Big Tech is proving more resilient than recent concerns might suggest.

Revenue at Microsoft’s cloud division climbed 16 per cent in the first three months of 2023, a faster than expected rate that dispelled fears of a sharp slowdown in spending by their corporate clients following a boom for digital services during the Covid-19 pandemic.

Google’s search advertising business also topped forecasts and returned to growth, with revenue rising 2 per cent in the quarter after slipping 2 per cent in the final three months of last year.

The biggest US tech companies had been expected to produce little growth, if any, owing to difficult comparisons with the strong start they had to 2022 and a spending slowdown that has hit many parts of their businesses.

The better than expected performance pushed Microsoft and Alphabet shares higher yesterday and boosted rivals due to release earnings this week, including Facebook parent Meta, which reports today.

Here’s what else is happening today:

• Results: Boeing, Danone, eBay, GSK, Heathrow, Hilton, Michelin and Standard Chartered report. See our Week Ahead newsletter for the full list.

• Economic data: The UK has fourth-quarter labour productivity figures, GfK publishes its consumer climate survey in Germany and France releases consumer confidence data.

• Microsoft-Activision deal: The UK’s Competition and Markets Authority is set to publish its final report on the $69bn takeover.

Five more top stories

1. US regulators and financiers scrambled to stabilise First Republic as its shares plunged further. The California-based bank’s stock price, down by more than 93 per cent this year, fell by a further 49.4 per cent yesterday. Read more about the “strategic options” that the lender is pursuing.

2. Exclusive: Shareholders have criticised Universal Music’s chief executive for an “excessive” $100mn pay deal ahead of the company’s annual meeting next month. Here’s why investors might reject Lucian Grainge’s pay package.

3. A senior executive has left Citigroup days after a report that he had met with Jeffrey Epstein on several occasions while working at JPMorgan Chase. Citi confirmed that Paul Barrett, head of North American private capital at its private bank, was no longer with the company and said it was unaware “until recently” of his association with the late sex offender.

4. Exclusive: Tencent is ramping up overseas investment in gaming assets with a focus on Europe, seeking to diversify away from China even as Beijing lifts punishing restrictions on the industry. Read the full story.

5. EU countries have criticised unilateral bans on Ukrainian grain imports that were imposed by Poland, Hungary, Slovakia and Bulgaria last week to protect their own farmers. Here’s why several agriculture ministers have condemned the unprecedented moves.

The Big Read

From a St Petersburg grandmother with her own art gallery to a teenager competing in international equestrian events, the family members of Russian warlord Yevgeny Prigozhin have led a charmed life. Western governments have struggled to impose costs on the Wagner founder’s relatives, even though they have been heavily involved in his businesses.

We’re also reading . . . 

Chart of the day

China already has a potent economy, a big role in world trade and a huge military, writes Martin Wolf. Its relationship with the US is likely to determine humanity’s fate in the 21st century — whether there will be peace, prosperity and protection of the environment, or the opposites.

Take a break from the news

The spice is right at Rambutan, London’s newest Sri Lankan restaurant. Cynthia Shanmugalingam’s offering in London’s Borough Market has been worth the wait, writes food columnist Ajesh Patalay.

Additional contributions by Gordon Smith and Emily Goldberg