Microsoft Sees Steady Cloud Growth After Record Quarterly Profit
- ByStartupStory | July 28, 2021
Microsoft sees steady cloud growth after record Quarterly profit. This was beyond 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%. The overall revenue rose by 21%taking the number 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.
The 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.”
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