Whatâs Going On Here?Microsoft reported earnings late on Wednesday â and judging by the boost its shares received, investors appreciated the je ne sais quoi of the piece. What Does This Mean?Microsoftâs quarterly revenue and profit came in above investor expectations, and it wasnât just down to its all-important cloud business. Its other two businesses played their part too: personal computing â which includes Xbox, Windows, and the search advertising revenue brought in when your grandparents use Bing â and productivity (think Microsoft Office and LinkedIn). Each of them contributes about a third of Microsoftâs total revenue, and they both grew more quickly than analysts had anticipated. Why Should I Care?For markets: Fighting talk.
Demand for cloud computing â which gives employees access to business resources from anywhere â has rocketed since the pandemic first herded us all into our homes. That might be why Microsoftâs cloud segment grew by a better-than-expected 20% â even more than the quarter before. That means cloud products now make up a third of its revenue, while the company has said â with a pluck that might make European rival SAP nervous â that itâs only just getting warmed up.
The bigger picture: Too good, too soon.
Microsoft mightâve smashed it, but a few tech companies have struggled to live up to the record-breaking demand they experienced earlier on in the year (tweet this). Just look at Netflix: the streaming giant wooed so many subscribers in the first half of 2020 that it was slim pickings last quarter, leading investors to ditch its stock. Intel ran into the same problem: demand for the chipmakerâs data centers â sky-high just a few months ago â plunged last quarter. Investors will be hoping that doesnât happen again on Thursday â that busy October day when Alphabet, Amazon, Apple, and Facebook all report their latest earnings. | 