4 months ago • 2 mins
What’s going on here?
What does this mean?
Microsoft’s stock has rocketed nearly 50% this year, so it’s safe to say the firm was facing some pretty lofty expectations on Tuesday. But the results, while decent-ish, didn’t exactly set the world on fire – leading to a pretty low-key initial reaction. Mind you, Microsoft did manage to clock up better-than-expected revenue growth of 10% compared to the same quarter last year, and profit also outdid forecasts, jumping 20%. Plus, the company’s crucial cloud business, Azure, grew 26% – slightly ahead of expectations, but still slower than the quarter before.
Meanwhile, Alphabet’s results were met with a standing ovation. The stars of that show were YouTube, which was back in growth mode, and Google’s own cloud business – which posted impressive growth of 28%.
Why should I care?
For markets: Azure-sky thinking.
Microsoft’s main game plan involves selling its AI-boosted software, Copilot, now with a shiny new price tag of an extra $30 per user. But some fireworks might also happen in Microsoft’s cloud business, Azure. As firms start letting AI loose, they’ll need more computing power, and that’s Azure’s cue to step in. And sure, this past quarter’s 26% growth isn’t exactly crawling – but investors will be hoping for a return to the glory days when Azure used to sprint at a pace of 35% plus.
Zooming out: Taking the temperature.
Google’s advertising revenue is a bit of a barometer for the economy. See, advertising’s a cyclical business, meaning firms splurge and starve their ad spending depending on the broader state of affairs. So with Google’s ad revenue growing again after a couple of tricky quarters – thanks in no small part to YouTube – maybe pundits will consider calling time on the US economic slowdown.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.
/3 • Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.