Shares
ticked up 0.7 percent after Microsoft projected that growth in its Azure cloud
computing business will continue apace following a quarter in which sales
climbed 51 percent.
Overall
revenue rose 21 percent to $46.2 billion, beating analysts' consensus by about
$2 billion, according to IBES data from Refinitiv.
The
pandemic-driven shift to remote work has boosted consumer appetite for
cloud-based computing, helping companies including Microsoft, Amazon's cloud
unit and Alphabet' Google Cloud.
Microsoft's
"guidance was off-the-charts strong and it shows the cloud growth story in
Redmond is hitting its next gear," said Daniel Ives of Wedbush Securities.
Revenue in
Microsoft's "Intelligent Cloud" segment rose 30 percent to $17.4
billion, with growth in Azure revenues handily surpassing the 43.1 percent jump
projected by analysts, according to consensus data from Visible Alpha.
Microsoft's
market capitalization stands at nearly $2.2 trillion, after climbing nearly 30
percent so far this year, compared with 18 percent for the overall S&P 500
Index, according to Refinitiv Eikon data based on Monday's closing price.
It has
surpassed the price-to-earnings ratios of tech titans Apple and Google, fueling
concerns among some analysts that it may be overvalued.
"Microsoft's
stock has made a big run since the beginning of the pandemic, and is trading at
rich multiples," said Haris Anwar, senior analyst at Investing.com.
"After such a powerful rally, its shares may take a breather, especially
when investors are still unclear how the demand scenario will evolve in the
post-pandemic environment."
Revenue
from personal computing, which includes Windows software and Xbox gaming
consoles, rose 9 percent to $14.1 billion.
But Xbox
content and services revenue dipped, suggesting that a pandemic-fueled gaming
boom is beginning to wane, said Paolo Pescatore, an analyst at PP Foresight.
The company must strengthen its presence in the home to better compete with
rivals, he added.
As makers
of cars to smartphones grapple with an unprecedented chip shortage, Microsoft
has not been immune.
"OEM
revenue declined 3 percent and Surface declined 20 percent," Microsoft
Chief Financial Officer Amy Hood said on a call with analysts. She added that
"both were impacted by the significant supply constraints noted earlier in
a good demand environment."
The chip
shortage could also be contributing to Microsoft's dip in Xbox content and
services revenue, as constrained hardware sales lead to a weaker performance in
services, Ives said.
"If
there's any lagging part of Microsoft, it's the consumer piece," he said.
"I think that continues to be a work in progress."
Microsoft
projected strong growth for professional social network LinkedIn, which
benefited during the quarter from robust advertising and a strengthening job
market.
The company
reported earnings of $2.17 per share, above the consensus estimate of $1.92.
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