fbpx

Microsoft Excels as AI Boosts Sales

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

  • Stock beat top and bottom line
  • Fails to please investors

Microsoft has experienced its swiftest revenue growth since 2022, primarily driven by the successful integration of AI products, which have recently enhanced the appeal of its data center services.

Microsoft reported impressive results with a revenue of $62.0 billion[1], exceeding the expected $61.14 billion, and an EPS of $2.93 against the anticipated $2.78 for the December quarter.

The company’s performance was robust across all divisions, with a standout performance from the AI-focused Intelligent Cloud sector, surpassing the $25.29 billion[2 expectations with $25.88 billion. Total cloud revenue hit $33.7 billion, higher than the forecasted $32.31 billion.

The Azure cloud division experienced a 30%[3] increase, beating the 27% analyst prediction, primarily due to the rising demand for cloud AI services, notably from Microsoft’s partnership with Open AI and their product, ChatGPT. AI demand contributed 6 percentage points to Azure’s growth, doubling its impact from the previous quarter.

Despite recording the best top-line growth since 2022, Microsoft’s stock saw a slight dip in after-hours trading and was down nearly 3% the next day of trading, not fully meeting investor expectations.

However, CEO Satya Nadella expressed satisfaction with these results, highlighting the practical application of AI at a large scale. Yet, the future revenue guidance was slightly conservative, projecting $60.5 billion for the next quarter, just below the consensus of $61.2 billion.

Microsoft, as one of the first major tech companies to announce quarterly results, faced a similar slowdown to other tech companies, resulting in workforce reductions and expense cuts following a pandemic-induced growth spurt. And that seemed to have produced results.

Microsoft is up 72% since the beginning of last year, while the tech-heavy NASDAQ is trailing with 49% returns over the same period.

Graph

Source: Yahoo Finance

In the past year, Microsoft reduced its workforce, particularly following its acquisition of Activision Blizzard, which led to an 8% cut in its video gaming staff, totaling 1,900 employees[4]. This move came as part of a broader industry trend of workforce reductions in tech companies like Google and Salesforce.

However, not all of Microsoft’s AI ventures have been successful; for example, their AI-powered Bing chatbot failed to challenge Google’s search engine dominance.

Microsoft’s investment in OpenAI, amounting to around $13 billion for a 49% stake in the startup’s profits and similar AI investments by other tech giants, is attracting regulatory attention in the U.S. and U.K.

This year, Microsoft began with a strong position, leading the pack in AI innovation and overtaking Apple as the most valuable company globally, reaching a $3 trillion market cap[5], a milestone only previously achieved by Apple.

Investors can long Microsoft using our 1x Microsoft, 2x Microsoft, 3x Microsoft. Alternatively, they can short Microsoft using our -1x Microsoft, -3x Microsoft.


    Footnotes:
  1. https://twitter.com/ConsensusGurus/status/1752469723067961619/photo/1
  2. https://www.zerohedge.com/markets/msft-shares-unimpresssed-big-top-bottom-line-beat
  3. https://www.cnbc.com/2024/01/30/microsoft-msft-q2-earnings-report-2024.html
  4. https://www.bloomberg.com/news/articles/2024-01-25/microsoft-cuts-1-900-jobs-in-gaming-including-at-activision
  5. https://companiesmarketcap.com/

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

Related Posts

Gold is in a healthy correction and higher price levels are likely by year end.
Gold is in a healthy correction and higher price levels are likely by year end.
Violeta-540x540-1.jpg
Violeta Todorova
Gold is in a healthy correction and higher price levels are likely by year end.
Gold is in a healthy correction and higher price levels are likely by year end.
Gold is in a healthy correction and higher price levels are likely by year end.
Supply, demand disequilibrium and lower US rates could squeeze the non-precious metal
Supply, demand disequilibrium and lower US rates could squeeze the non-precious metal
Violeta-540x540-1.jpg
Boyan Girginov
Supply, demand disequilibrium and lower US rates could squeeze the non-precious metal
Supply, demand disequilibrium and lower US rates could squeeze the non-precious metal
Supply, demand disequilibrium and lower US rates could squeeze the non-precious metal
Q2 is poised for European stocks’ turnaround and rising interest in energy stocks
Q2 is poised for European stocks’ turnaround and rising interest in energy stocks
Violeta-540x540-1.jpg
Sandeep Rao
Q2 is poised for European stocks’ turnaround and rising interest in energy stocks
Q2 is poised for European stocks’ turnaround and rising interest in energy stocks
Q2 is poised for European stocks’ turnaround and rising interest in energy stocks
Escalation of the conflict in the Middle East threatens to derail the economic recovery.
Escalation of the conflict in the Middle East threatens to derail the economic recovery.
Violeta-540x540-1.jpg
Violeta Todorova
Escalation of the conflict in the Middle East threatens to derail the economic recovery.
Escalation of the conflict in the Middle East threatens to derail the economic recovery.
Escalation of the conflict in the Middle East threatens to derail the economic recovery.
What is an ETF? How does an ETF work? Key characteristics of ETFs.
What is an ETF? How does an ETF work? Key characteristics of ETFs.
Violeta-540x540-1.jpg
Boyan Girginov
What is an ETF? How does an ETF work? Key characteristics of ETFs.
What is an ETF? How does an ETF work? Key characteristics of ETFs.
What is an ETF? How does an ETF work? Key characteristics of ETFs.
Violeta-540x540-1.jpg
Pawel Uchman
A quick primer on leveraged instruments available in markets today.
A quick primer on leveraged instruments available in markets today.
Violeta-540x540-1.jpg
Sandeep Rao
A quick primer on leveraged instruments available in markets today.
A quick primer on leveraged instruments available in markets today.
A quick primer on leveraged instruments available in markets today.

Violeta Todorova

Senior Research

Violeta è entrata a far parte di Leverage Shares nel settembre 2022. È responsabile dello svolgimento di analisi tecniche e ricerche macroeconomiche ed azionarie, fornendo pregiate informazioni per aiutare a definire le strategie di investimento per i clienti.

Prima di cominciare con LS, Violeta ha lavorato presso diverse società di investimento di alto profilo in Australia, come Tollhurst e Morgans Financial, dove ha trascorso gli ultimi 12 anni della sua carriera.

Violeta è un tecnico di mercato certificato dall’Australian Technical Analysts Association e ha conseguito un diploma post-laurea in finanza applicata e investimenti presso Kaplan Professional (FINSIA), Australia, dove è stata docente per diversi anni.

Julian Manoilov

Marketing Lead

Julian è entrato a far parte di Leverage Shares nel 2018 come parte della prima espansione della società in Europa orientale. È responsabile della progettazione di strategie di marketing e della promozione della notorietà del marchio.

Oktay Kavrak

Head of Communications and Strategy

Oktay è entrato a far parte di Leverage Shares alla fine del 2019. È responsabile della crescita aziendale, mantenendo relazioni chiave e sviluppando attività di vendita nei mercati di lingua inglese.

È entrato in LS da UniCredit, dove è stato responsabile delle relazioni aziendali per le multinazionali. La sua precedente esperienza è in finanza aziendale e amministrazione di fondi in società come IBM Bulgaria e DeGiro / FundShare.

Oktay ha conseguito una laurea in Finanza e contabilità ed un certificato post-laurea in Imprenditoria presso il Babson College. Ha ottenuto anche la certificazione CFA.

Sandeep Rao

Research
Sandeep è entrato a far parte di Leverage Shares nel settembre 2020. È responsabile della ricerca sulle linee di prodotto esistenti e nuove, su asset class e strategie, con particolare riguardo all’analisi degli eventi attuali ed i loro sviluppi. Sandeep ha una lunga esperienza nei mercati finanziari. Iniziata in un hedge fund di Chicago come ingegnere finanziario, la sua carriera è proseguita in numerose società ed organizzazioni, nel corso di 8 anni – da Barclays (Capital’s Prime Services Division) al più recente Index Research Team di Nasdaq. Sandeep detiene un M.S. in Finanza ed un MBA all’Illinois Institute of Technology di Chicago.

Gold Retreats But Rally is Not Over

Copper Ready to Explode

Q2 2024 Market Outlook: Rocky Road Ahead

What is an ETF? (Exchange Traded Fund)

How Do Leverage Shares ETPs Trade in Multiple Currencies

Currency Impact