Technology giant Microsoft (MSFT) has reported financial results that beat Wall Street forecasts on the top and bottom lines, driven by accelerating growth in the company’s cloud computing unit.
The Seattle, Washington-based company announced earnings per share (EPS) of $3.30, which topped analysts consensus expectation of $3.10. Revenue in what was Microsoft’s Fiscal first quarter totaled $65.59 billion, which was ahead of Wall Street forecasts that called for $64.51 billion. Sales were up 16% from a year ago.
Management attributed the strong results to its Azure cloud computing business, which grew faster than anticipated. Azure growth for the quarter came in at 33%, which was better than the 29.4% growth penciled in by analysts. This was the first print from Microsoft under a new reporting structure that stripped out mobility, security, and some other data analytics from the cloud computing segment.
Cloud Powers Microsoft’s Results
Microsoft’s full Intelligent Cloud segment that includes not only Azure but also Windows Server and enterprise services, generated $24.09 billion in revenue during the quarter, up 20% and slightly more than the $24.04 billion consensus forecast among analysts.
In other areas of its business, Microsoft said that it achieved 2% growth in sales of its devices and Windows operating system licenses to device makers. The company also continues to spend heavily on artificial intelligence (AI) and the data centers that support AI applications and models. Microsoft spent $20 billion on capital expenditures in Fiscal Q1, up 79% from a year earlier.
Executives at Microsoft plan to provide an update to the company’s forward guidance on their earnings call with analysts and media. MSFT stock was up a little more than 1% on news of its latest financial results and has risen 15% year-to-date.
Is MSFT Stock a Buy?
Microsoft stock has a consensus Strong Buy rating among 30 Wall Street analysts. That rating is based on 27 Buy and three Hold recommendations made in the last three months. There are no Sell ratings on the stock. The average MSFT price target of $503.15 implies 16.33% upside from current levels.
