Last Thursday, data showed that Microsoft Corp (MSFT.O) has managed to beat their analysts’ projected numbers for fourth quarter profit and revenue. This is believed to be caused by the continuously increasing sales from the tech giant’s cloud business. The company shares reached all-time highs.
After Chief Executive Satya Nadella’s promotion in 2014, the company has started to shift away from their typical “Windows operating system software.” Microsoft has slowly been making use of cloud services. Using this service, customers can upload their work into the data centers that are managed by the company.
A 64% growth in the revenues of Azure was observed as June 30 approached. This data was compared to 89% in 2018 and 70% from the quarter before the “fiscal fourth quarter.” However, Microsoft did not give details about the exact revenue of Azure. They simply blended the figures into their “intelligent cloud unit” that yielded an income of around $11.4 billion. This is a dash more than what their analysts had expected, which was $11 billion, as shown in the Refinitiv data.
The tech giant has also predicted around $10.3 billion to $10.5 billion for their total sales on the intelligent cloud for the first quarter, their midpoint being $10.13 billion, which was higher than analyst estimates. The prediction helped in the increase of the company sales for around 2.6% to highs up to about $140 in trade deals after-hours.
The continuous development of the cloud has upped Microsoft’s value in the market by more than $1 trillion in April “for the first time.” By Thursday, all of Microsoft’s businesses that are related to Azure showed a higher quarterly revenue in comparison to anything Windows-based.
Hal Eddins, the chief economist for Capital Investment Counsel, one of the shareholders of Microsoft, emphasized that despite the pressure on the company, they were able to execute well. He also added that the usage of the cloud has always been a target for Microsoft and that they “have painted a big bullseye on the back of AWS.”
Amazon Web Services, Azure’s biggest rival in the business of cloud computing, is currently occupying the market with a staggering share of 32.8%. Canalys, a well-known research firm, publish this data. Meanwhile, Microsoft comes in second with 14.6% and Google in third with 9.9%.
The company has also made efforts to become distinguished from AWS through combining their traditional software with the Azure products. An analyst from Forrester, Chris Voce, has explained how this helped the company reach its current status. He said that Microsoft’s “hybrid cloud strategy has resonated with enterprises,” making their services seem more flexible and realistic.
The head of investor relations at Microsoft, Mike Spencer has also explained that the numbers obtained by their Windows program were mainly due to the Windows 7 upgrades that most of their customers are still performing. However, this upgrade will be phased out next year, causing many PC customers to stockpile their inventories in case of probable tariffs.