Microsoft Stock Gains as Azure Cloud Business Impresses

By Avi Ben Ezra Wednesday, January 27, 2021

Microsoft delivered another impressive round of quarterly results on the back of the impressive growth in its Azure cloud business. As a result, Microsoft stock trades about 1.5% higher in the pre-trading market session Wednesday.

Microsoft's location in Silicon Valley.

The Business is “Positioned for Even Greater Success in Cloud”

The tech company recorded earnings per share (EPS) of $2.03 to easily beat the market’s expectations of $1.64. Similarly, revenue for Q2 2021 financial results was reported at $43.08 billion to top $40.18 billion expected from Wall Street.

“What we have witnessed over the past year is the dawn of a second wave of digital transformation sweeping every company and every industry. Building their own digital capability is the new currency driving every organization’s resilience and growth. Microsoft is powering this shift with the world’s largest and most comprehensive cloud platform,” said Satya Nadella, chief executive officer of Microsoft.

Forward-looking guidance, which is another metric closely followed by market analysts and investors, also came in better-than-expected. The business expects to generate between $40.35 billion and $41.25 billion in revenue for the ongoing quarter. The middle point of $40.80 billion is again better than the $38.70 billion expected from analysts.

The company again enjoyed great success in its Azure cloud business, which saw its revenue grow 23% to $14.60 billion. Analysts surveyed by FactSet expected Azure to report revenue of $13.77 billion.

“We believe the strong numbers from Nadella & Co. is a broader indication of strength we expect to see across the enterprise cloud software landscape throughout this earnings season,” Wedbush analyst Daniel Ives wrote in a note.

Gregg Moskowitz, managing director at a Japanese investment banking company Mizuho Securities, believes the company remains positioned for even greater success going forward especially with its cloud services.

“Azure revenue growth (+48% Y/Y CC) was impressive, representing no deceleration despite the law of larger numbers and a modestly tougher compare. F3Q guidance was also significantly above the Street. Looking forward, we remain confident that MSFT is positioning for even greater success in cloud over the medium-term and beyond,” Moskowitz wrote in a note.

Microsoft stock price trades 1.5% higher in pre-open today, after initially soaring 5%. Shares printed a fresh all-time high yesterday in anticipation of the quarterly results.

Summary

Microsoft stock trades modestly higher in pre-open Wednesday after the company reported strong results for its fourth quarter.

About the Author


Headshot for author Avi Ben Ezra

Avi Ben Ezra is the Chief Technology Officer (CTO) and Cofounder of SnatchBot and SnatchApp (Snatch Group Limited). He leads the Group’s long-term technology vision and is responsible for running all facets of the tech business which includes being the architect of the platforms and UI interfaces.

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