Matthew Fox
- Microsoft stock jumped 5% on Wednesday after the company showed resilience in its quarterly earnings.
- The cloud giant said it expected double digit growth in both revenue and profits for its upcoming fiscal year.
- “This will be bullish guidance heard around the world and on the Street as the market digests this positive commentary in a darkening macro,” Wedbush said.
Microsoft stock jumped more than 5% on Wednesday after the mega-cap tech company reported fourth-quarter earnings results that impressed investors amid a time of heightened uncertainty and concerns of an imminent recession.
While Microsoft’s quarterly results didn’t beat analyst estimates, they did show resilience as the Azure cloud platform delivered revenue growth of 46% on a constant currency basis.
Here were the key numbers:
Revenue: $51.9 billion, versus analyst estimates of $52.4 billion
Earnings per share: $2.23, versus analyst estimates of $2.29
Intelligent Cloud Revenue: $20.9 billion, versus analyst estimates of $21.1 billion
“In a dynamic environment we saw strong demand, took share, and increased customer commitment to our cloud platform,” CFO Amy Hood said.
While the results weren’t a home run, they weren’t as bad as some may have feared amid a period of heightened economic uncertainty. Wedbush analyst Dan Ives called Microsoft’s cloud results “a rock solid performance in this backdrop and speaks to the trajectory looking forward.”
Microsoft’s guidance for its upcoming fiscal year helped ease investor concerns of future weakness, which ultimately turned around its stock price after it initially sold off about 3% on the results.
The cloud giant said it expects double-digit revenue growth in both revenue and operating income in its fiscal year 2023, reaffirming its prior guidance with the expectation of margins staying flat.
“This will be bullish guidance heard around the world and on the Street as the market digests this positive commentary in a darkening macro,” Ives said. “MSFT said they are seeing firm customer demand and clear strength on the cloud bookings front in the field with the digital transformation enterprise shift accelerating.”
Ives reiterated his “Outperform” rating on Microsoft but lowered his price target to $320 from $340, representing potential upside of 21% from current levels.
Microsoft’s solid earnings outlook, combined with the quarterly results from Alphabet, helped power the Nasdaq 100 higher by more than 2% on Wednesday.
