TLDR: Microsoft’s strong Q2 results were driven by AI, resulting in a price target lift
Microsoft reported strong fiscal second-quarter results, with revenue increasing about 17% year over year to $62.1 billion, beating Street estimates. Adjusted EPS also increased 33% from last year. The company’s AI strategy played a significant role in its success, with Azure, Microsoft’s cloud services business, delivering strong results due to the growth of AI applications on its platform. The company’s Copilot AI assistant also showed promising results, with over 1.3 million paid subscribers. Despite the positive performance, Microsoft shares remained flat post-earnings due to high expectations and a recent rally to new all-time highs.
Key points:
- Microsoft’s Q2 revenue increased about 17% YoY to $62.1 billion, beating Street estimates
- Adjusted EPS increased 33% from last year
- Azure’s strong performance was driven by AI applications and customer growth
- Copilot, Microsoft’s AI assistant, has over 1.3 million paid subscribers
- High expectations and recent all-time highs led to flat post-earnings share performance
Microsoft’s Strong Q2 Results Driven by AI
Microsoft announced its strong fiscal second-quarter results, driven by the strength of its AI strategy and applications. The company reported revenue of $62.1 billion, a 17% increase year over year, beating Street estimates. Additionally, adjusted EPS increased 33% from last year, reaching $2.93.
Azure, Microsoft’s cloud services business, played a significant role in the company’s success. Azure’s revenue grew by 30% YoY, surpassing estimates and contributing to the overall growth of the Intelligent Cloud segment. AI services within Azure accounted for 6 points of growth, and the number of Azure AI customers grew to 53,000, with over one-third completely new to Azure.
Microsoft’s Copilot AI assistant also showed strong results, with over 1.3 million paid subscribers. This subscription-based revenue stream is expected to continue growing and contributing to Microsoft’s success.
Despite the positive performance, Microsoft shares remained flat in post-market trading, likely due to high expectations and a recent rally to new all-time highs. However, the continued execution of Microsoft’s AI strategy is expected to lead to further growth in the future.
Conclusion
Microsoft’s strong Q2 results showcase the company’s success in the AI space, with Azure and Copilot driving revenue growth. The company’s strategic focus on AI applications, customer growth, and efficiency has resulted in a positive financial performance. Although the high expectations and recent all-time highs of Microsoft shares may have contributed to a flat post-earnings performance, the company’s consistent delivery of quality quarters and its long-term AI strategy make it a priority tech investment.
As a result of Microsoft’s strong quarter and promising outlook, the company has received a price target lift. Its continued execution of its AI strategy should lead to further growth in the future.
Source: https://www.cnbc.com/2024/02/18/microsoft-earnings-q2-2024.html