A tale of two earnings calls - and our AI was on the right side of it

On October 28, Wall Street experienced a rotation rather than a directional move, with major indices closing higher for the third consecutive day. The S&P 500 rose 0.28% to 7,743.98, the Nasdaq Composite increased 0.27% to 26,549.85, and the Dow Jones Industrial Average gained 0.19% to 52,475.10. Tech stocks led the gains, while financials, utilities, and real estate lagged.

Following the market close, two of the world's largest companies reported earnings, but their stocks reacted in opposite ways. ProPicks AI, an artificial intelligence system, demonstrated accuracy by correctly predicting Microsoft's stock performance. Microsoft (MSFT) is part of the Dominate the Dow strategy, which selects 10 strong stocks from a pool of 30 for market-beating returns.

The AI model had held Microsoft since July 1, 2025, at $383.56, and Microsoft's stock closed at $531.01, up 38.4% since entry and 3.6% in October. Microsoft's fiscal Q1 2027 results, covering July to September 2026, exceeded analysts' forecasts for both revenue and earnings. Revenue reached $92.279 billion, up 19%, and operating income rose 21% to $45.9 billion, with an operating margin of 50%.

Net income grew 32% to $36.6 billion, while diluted GAAP earnings per share increased 32% to $4.92. Microsoft Cloud revenue grew 30% to $63.9 billion, and Azure revenue accelerated 48%, from $22.4 billion to $33.165 billion. The new segment reporting, called Agents and Infra, showed $76.8 billion in revenue, up 25%, and $40.6 billion in operating income.

Microsoft also saw substantial capital expenditures and equipment acquisitions. Alphabet fell 10.42% after hours following an earnings report where EPS fell short of expectations despite revenue exceeding consensus. Alphabet also disclosed a capital expenditure range of $195 billion to $205 billion for the year. Apple, another holding in the Dominate the Dow strategy, rose 21.8% since entry, closing at $343.83.

Apple's next quarterly report is expected after market close on October 29. Penguin Solutions, a mid-cap holding in the Mid-Cap Movers strategy, rose 10.6% in October, staying above its entry price.