Microsoft Beat Demanding Earnings Expectations and Stock Won’t Stop Rising

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Microsoft  (MSFT) - Get Report handily beat already-heightened earnings estimates Wednesday and the stock rose, after having risen considerably into the print. 

The stock rose almost 4% to $184 a share in post-market trading. 

The stock had already been up 7.3% for the 20 days leading into earnings even after a big run-up to end March. Investors are betting that the work-from-home environment will accelerate the shift in business data storage to the cloud. 

In February, Microsoft announced that its slow growth More Personal Computing business would take a hit as PC manufacturers couldn’t meet demand as the Coronavirus pandemic got underway and hit the supply chain. Microsoft beat estimates on that segment, which was overshadowed anyway by its high-growth businesses. 

Here were the results: 

  • Revenue: $35B v. analyst estimates of $33.76B
  • EPS: $1.40 v. $1.28
  • Operating Margin: 37% v. 35% 

All revenue segments beat estimates, with Intelligent cloud revenue, one of Microsoft’s extremely high growth areas, coming in at $12.28 billion. Estimates were for $11.79 billion. 

Management highlighted the $13.3 billion commercial cloud revenue, which was up 39% year-over-year. The company also highlighted that Azure revenue grew 59% year-over-year, against some analyst’s elections of 55%. 

Microsoft addresses guidance on the earnings. 

Wedbush Securities' Tech Analyst Dan Ives and Catalyst Capital Advisors Chief Investment Officer David Miller break down what this means for Microsoft and what to do with the stock now. Watch the quick video above. 

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