Microsoft – shares rise 4% as cloud saves the day
- Revenue rose 12% in the first quarter, including a 2% increase in More Personal Computing
- Intelligent Cloud revenue up 19%, including a 28% increase in Azure and other cloud services revenue which was better than expected
- Shares rise 4.4% in after-hours trading
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown:
“Microsoft’s come out the gate swinging this quarter. A resilient set of numbers highlights how well it’s placed to capitalise on the world’s growing need for cloud solutions. So few companies can afford a seat at this table that Microsoft’s able to dig in. With that said, growth is expected to moderate, despite being resilient in the scheme of things. End customers are likely going to trim spending while they ride out the economic storm, meaning blockbuster tech budgets are on the chopping block. The potential for Microsoft to do exceptionally well from generative AI remains, but the exact moment in time that this tech will be adopted at large will depend on when corporate spending picks up the pace, and confidence needs to improve before that can happen. Microsoft has a significant head start in this arena though, and initiatives like copilots which aims to boost productivity at work offers an attractive solution to businesses looking to improve margins in the tough climate. The exact contribution from products like this are yet to fully shine through though so that’s something to watch and wait for.
A marked slowdown in personal computing continues to bite. Fewer people are splashing the cash on hardware and the software that goes with it, which is a classic symptom of the economic wheel losing steam and Microsoft has cloud to pick up the slack.
Detail remains thin on the ground where the Activision deal is concerned. The brave new frontiers that come with this acquisition will allow Microsoft to venture beyond the world of PCs and consoles, thanks to names like Candy Crush. There’s no doubt that chasing gaming is a prudent move but exactly what the new haul of IP will mean for Microsoft and Xbox remains to be seen – especially since the loss of cloud exclusivity rights.”
