☁ Microsoft: On Cloud Nine?

MSFT beats analyst estimates in its Q2 earnings

Hey Global Investor, here’s what you need to know before the US markets open.

Market Snapshot 📈

S&P 500 (Yesterday’s Close) 3,849.62 −5.74 (0.15%)

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Microsoft: On Cloud Nine?

Covid was just the catalyst. Companies large and small were already contemplating varying degrees of digital transformation. Under Satya Nadella’s leadership, Microsoft, with its Azure cloud service offering, is powering this shift in a big way. The results of these efforts are becoming increasingly visible at the software giant.

Background: GM had purchased Cruise Automation, the San Francisco-based self-driving car company, for $1B in 2016. This acquisition was expected to jump-start GM’s own self-driving efforts. Honda Motor Co. announced a collaboration with GM and its Cruise division to develop self-driving vehicles for its autonomous vehicle mobility service (MaaS) business in Japan.

So what does this have anything to do with Microsoft, you ask? Well, Microsoft recently announced a $2B investment to become the preferred cloud provider for Honda-GM-Cruise collaboration. The enhanced cloud infrastructure will better equip Cruise’s autonomous vehicles to navigate roads and highways in the future.

That’s just the tip of the iceberg. Organizations around the world are similarly looking to Microsoft as they navigate their own cloud requirements. Case in point, the $10B Joint Enterprise Defense Infrastructure (JEDI) contract Microsoft had won from the Department of Defense (which is being contested by Amazon in the US courts).

What is Happening? Complementing Azure’s growth, Microsoft also saw comprehensive sales boost in consumer products (laptops/desktops) as adults and children alike took to the Internet for their work/school. On the gaming front (Xbox Series S and Series X), content and services shot up 40% for the quarter, and Xbox hardware sales rose 86%. And thus, Q2 2021 pushed Microsoft’s results ever higher, and well ahead of Wall Street consensus estimates.

Revenue: $43.1B Vs. $40.2B (expected)
EPS: $2.03 Vs. $1.64 (expected)
Intelligent Cloud: $14.68B Vs. 13.76B (expected)
Personal computing: $15.12B Vs. $13.55B (expected)

Not just in terms of results for the previous quarter, but even projections for the next quarter exceeded analyst expectations across every business unit. It seems like Microsoft is going from strength to strength and then some!

Market Reaction: MSFT rose 5.7% during the quarter. The shares closed up 1.22% at $232.33 yesterday, and are up 1.75% pre-market.

Company Snapshot 📈

MSFT $232.33 +2.80 (1.22%)

Analyst Rating (31 Ratings) BUY 90%  HOLD 10%  SELL 0%

Newsworthy 📰

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Gamestonk!: GameStop Extends Meteoric Stock Surge on Boost From Musk Tweet (GME +92.71%, premarket +124.9%)

No Tricks: SAP CEO says Qualtrics $1.5 billion IPO is ‘massively oversubscribed’ (SAP +4.05%)

Later Today 🕒

  • Before Market Open: AT&T Inc Earnings (T)
  • Before Market Open: Automatic Data Processing Inc Earnings (ADP)
  • Before Market Open: Boeing Co Earnings (BA)
  • After Market Close: Apple Inc Earnings (AAPL)

Fun Fact of The Day 🌞

Goats have rectangular pupils in their eyes

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