MSFT Stock: Microsoft Above Quarterly Targets in Cloud Growth

Microsoft (MSFT) shares fell on Wednesday after the software giant beat Wall Street’s targets for the first fiscal quarter, but was guided much lower by current-period outlooks. MSFT stock fell more than 7% on the news.


The Washington-based company Redmond said late Tuesday that it earned $2.35 per share on sales of $50.1 billion in the quarter ended September. 30. Analysts surveyed by FactSet had expected Microsoft to earn $2.31 per share from sales of $49.7 billion. On a year-over-year basis, Microsoft earnings increased 4% as sales rose 11%.

Microsoft credits cloud computing services for better-than-expected results. However, the Azure infrastructure business grew at a slightly slower-than-expected rate.

“Microsoft Cloud revenue this quarter was $25.7 billion, up 24% year-over-year (31% increase in constant currency),” Amy Hood, Chief Financial Officer, said in a press release. Said. “While delivering compelling value for customers, we continue to see healthy demand across our business operations, including another quarter solid booking.”

Microsoft Stock Falls Late

For the current quarter, Microsoft expects sales to be between $52.35 billion and $53.35 billion. The $52.85 billion midpoint was well below Wall Street’s $56.2 billion target for the December quarter.

MSFT stock fell 7.1% to 232.80 in the morning trading on the stock market today. In the regular session on Tuesday, MSFT stock was up 1.4% to close at 250.66.

Of Microsoft’s three business segments, Intelligent Cloud was the best performer in the September quarter. Revenue in the segment grew 20% year over year to $20.3 billion. The unit includes server products and cloud services such as Azure.

Microsoft’s Productivity and Business Process division saw sales increase 9% to $16.5 billion. The division includes Office productivity software as well as Dynamics and LinkedIn jobs.

Microsoft’s More Personal Computing unit fell slightly behind, with revenue falling to $13.3 billion. The volume includes Windows PC software, Xbox video games, Surface computers, internet search and advertising.

MSFT Equity Group First in Group

Ahead of Microsoft’s earnings report, analysts had expressed concerns that the weakening PC market would hamper results.

Another PC-centric stock, Logitech International (LOGI) rose on Tuesday after the peripherals maker met Wall Street’s September quarter earnings target and maintained its sales and earnings targets for fiscal 2023. But sales in the September quarter missed the sights as exchange rates took a bite.

Logitech stock rose 11% to 50.64 on Tuesday.

MSFT stock ranks first among seven shares in IBD’s Computer Software-Desktop industry group, according to IBD Stock Checkup. However, it has a mediocre IBD Compound Rating of 65 out of 99.

IBD’s Compound Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.

Follow Patrick Seitz on Twitter: @IBD_PSeitz For more stories on consumer technology, software and semiconductor stocks.


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