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Author: Alan LittleDate: 2022-01-27

Microsoft (MSFT) +2.9% on Q4 beats, forecast for significant cloud services growth

Microsoft (MSFT) shares climbed 2.9% on Wednesday after the tech giant posted Q4 beats and said that Azure would deliver “significantly” more revenue in Q1.

 

Microsoft (MSFT) said that cloud revenue grew by 46% in Q4 as it posted top and bottom line beats after Tuesday’s close and proceeded to make share gains of around 2.9% in Wednesday’s trading.

 

Microsoft came into the latest quarterly report on the back of a huge $69bn acquisition of video game producer Activision Blizzard (ATVI), which was announced last week and will be the tech giant’s biggest ever takeover if it closes as planned by next year.

 

Investors were looking for strength across Microsoft’s divisions in Q4 though, not just in gaming, and it delivered on that score, with cloud services among those growing at an ample pace yet again.

 

This helped overall group revenues to climb 20% to $51.7bn for the three months to 31st December, which was around $800m above the $50.89bn figure touted by analysts ahead of the report.

 

Adjusted earnings also jumped 22.1% to $2.48 per share to trump the consensus by 17 cents.

 

Analysts were initially concerned about a “deceleration” for Microsoft’s core Azure service, which had grown by +50% consistently in recent quarters.

 

However, Stifel said on Wednesday that these concerns “were quickly allayed” when Microsoft stated that it would accelerate “significantly” again in Q1.

 

Piper Sandler analysts were pleased with the numbers and urged growth investors to buy into Microsoft shares again after a brief sell-off.

 

Those keeping an eye on gaming will also have welcomed an 8% rise in revenue for that division and a 10% spike in sales from Xbox content and services.

 

MSFT had dipped 14% since 1st January prior to the Q4 report, but it made gains on Wednesday, with its 2.9% advance by late morning setting a $301.09 price.

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