Microsoft sees steady cloud growth after record April-June quarter profit
By Akanksha Rana and Julia Love
(Reuters) -Microsoft Corp posted
its most profitable quarter on Tuesday, beating Wall Street expectations for
revenue and earnings, as PC sales declines stemming from a global chip shortage
were more than made up for by a boom in cloud services.
Shares ticked up 0.7% after Microsoft projected
that growth in its Azure cloud computing business
will continue apace following a quarter in which sales climbed 51%.
Overall revenue rose 21% to $46.2 billion, beating analysts'
consensus by about $2 billion, according to IBES data from Refinitiv.
The pandemic-driven shift to remote work has boosted consumer
appetite for cloud-based computing, helping companies including Microsoft,
Amazon.com Inc's cloud unit and Alphabet Inc's Google Cloud.
Microsoft's "guidance was off-the-charts strong and it shows
the cloud growth story in Redmond is hitting its next gear," said Daniel
Ives of Wedbush Securities.
Revenue in Microsoft's "Intelligent Cloud" segment rose
30% to $17.4 billion, with growth in Azure revenues handily surpassing the
43.1% jump projected by analysts, according to consensus data from Visible
Alpha.
Microsoft's market capitalization stands at nearly $2.2 trillion,
after climbing nearly 30% so far this year, compared with 18% for the overall
S&P 500 Index, according to Refinitiv Eikon data based on Monday's closing
price.
It has surpassed the price-to-earnings ratios of tech titans Apple
Inc and Google, fueling concerns among some analysts that it may be overvalued.
"Microsoft's stock has made a big run since the beginning of
the pandemic, and is trading at rich multiples," said Haris Anwar, senior
analyst at Investing.com. "After such a powerful rally, its shares may
take a breather, especially when investors are still unclear how the demand
scenario will evolve in the post-pandemic environment."
Revenue from personal computing, which includes Windows software
and Xbox gaming consoles, rose 9% to $14.1 billion.
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