Massive gains for MicrosoftMicrosoft reports blowout Q1 earnings that beat analysts expectations, showcasing its biggest revenue growth since 2018. Nevertheless, stocks slip 2.83%.
Microsoft reported earnings per share of $1.95, adjusted, on revenue of $41.71 billion, compared to expectations of $1.78 per share on $41.03 billion in revenue. The IT giant reported 19% annualized growth in revenue for Q1 – the biggest quarterly increase in revenue growth it’s posted in two years. Much of that was driven by gains in PC sales, thanks to the Covid-led computer boom prompted by people forced to work/study at home. Research company Gartner reported that PC shipments to retailers at large increased 32% in Q1 of this year: the strongest quarter for PC growth rate in over two decades.
Microsoft’s market cap had been flirting with $2 trillion in the days leading up to the earnings, buoyed by the excitement around its growing cloud services business. Azure didn't disappoint, reporting a 50% increase in sales. Even though the growth matched the gain it posted the previous quarter, it seems that investors might have been looking for a bigger blockbuster report; possibly because Azure will have to really shine to successfully compete with dominant cloud services Amazon (AWS) and Google.
Microsoft has been making the shift from traditional software to the cloud for a few years now, and it’s finally starting to see that shift pay off – stock prices soared 40% in 2020 and have jumped another 20% so far in 2021, taking the firm to a $1.97 trillion market cap and making it the second-largest listed stock in the US after Apple.
“Over a year into the pandemic, digital adoption curves aren’t slowing down. They’re accelerating, and it’s just the beginning,”
said CEO Satya Nadella.
“We are building the cloud for the next decade, expanding our addressable market and innovating across every layer of the tech stack to help our customers be resilient and transform.”