Microsoft Crowned New Cloud King
Soaring Azure revenue and profitability are providing a huge lift.
After lagging their rivals in the AI race over the summer, Microsoft has leaned into their core strengths and come roaring back to prominence on the back of exploding cloud revenue. This is beat-for-beat exactly how analysts at Moby predicted MSFT would keep up.
Microsoft posted a massive 13% revenue boost to $56.5 billion, and they managed to squeeze an astonishing $2.99 EPS out of that revenue as well. This was way beyond even some of the most bullish estimates coming out of the street this week.
Leading the charge was Microsoft's Intelligent Cloud business, which soared to $24.3 billion in revenue. Azure lead the charge inside that unit with 28% YoY growth and much higher profitability. But Microsoft's chief strength has been bundling enterprise products together for large clients, and that really paid off by allowing Azure to lift Microsoft's Productivity segment 13% on the year as well.
WHY IT MATTERS
With Microsoft well behind in the AI wars, this is a massive show of strength as they fight to keep up with Alphabet and Meta. Instead of betting the farm on winning the AI race outright, Microsoft is showing you can incrementally drive market share as demand for cloud computing keeps increasing. More importantly, with a bigger focus on Cybersecurity this year, Microsoft's focus on securing their cloud products is setting them up to be a more practical choice for more cautious organizations. This news is a solid win and Microsoft lifted as much as 4% at open.