Microsoft earnings a ‘comedy of errors’: Analyst
The bulls on Wall Street, however, remain undeterred.
Microsoft shares were hit particularly hard, falling 11.4 percent.
Citi analyst Walter Pritchard called the earnings report a "comedy of errors." He ticked off a list of disappointments, including poor Surface tablet sales and the $900 million inventory write down.
"Everything that could have gone wrong, went wrong," he said.
The fast money that juiced up the stock earlier this year is also leaving because of the quarterly miss, Brent Thill of UBS told CNBC. But he expects things to turn around.
"The whole reorg is around getting them aligned to where the market is going, which is clearly away from the PC and toward mobility and the cloud," Thill said. "So when you get to the September analyst day, they will give you more financial guidance, and it will be the next catalyst for the stock."
Thill has a "buy" rating on the stock with a $40 price target. After Friday's selloff that implies 27 percent upside.
"Microsoft is a great enterprise company. They've clearly stumbled on the consumer side," he said.
The other big miss came from Google, but again analysts see reason to look past the messy quarter.
Ben Schachter, an analyst at Macquarie Research, attributed the weakness in Google to investor concerns about the 6 percent decline in costs per click, or how much the company gets per click per ad, as well as disappointing partner network revenue.
"We don't think these are fundamental problems," he told CNBC. "There is nothing fundamental that says, 'Let me step back. Maybe I don't want to buy here.' I say, yes, of course we want to buy it. We think it's just getting going."
Cantor Fitzgerald's Youssef Squali is also "not overly concerned" about the deterioration in costs per click. He expects these declines to start to improve and turn positive in 2014.
Schachter also said that Google will figure out how to make more money from mobile advertising over time as users shift from desktop. "You have the Internet available to you more often and on more devices—that's generally a good thing," he said. "Even if you pay less per click, you have the Internet around you all the time so you're clicking more often."
Motorola has also been a big drag on Google's profitability but Evan Wilson of Pacific Crest Securities anticipates "a sharp upward revision in terms of profitability for Motorola in the second half of this year and things will look a lot better in terms of profitability growth."
Schachter expects Google shares to reach $1,175, a 31 percent upside.
Microsoft is a UBS investment banking client and the analyst and his family own shares. Microsoft is also a Citi investment banking client and Citi makes a market in Microsoft securities.