Microsoft Hits High Trading As Cloud Computing Revenue Surged

The US tech giant, Microsoft Corp. (MSFT) witnessed all-time high trading of its shares since the revenue and profits of its cloud computing service surged significantly over the last two years.

On Wednesday, January 29, 2020, the world’s leading software company reported that the revenue surpassed the Wall Street expectations as there has been a rapid growth of profits in its Azure cloud computing during eight quarters.

Figures of ‘Commercial Cloud’ Revenue

MSFT’s cloud service division, Azure has been making remarkable progress in building, deploying, and managing applications and technologies for cloud service since its introduction in 2010 despite fierce competition from Amazon.com Inc.’s cloud unit.

The grand success in MSFT’s cloud service was accredited to the CEO, Satya Nadella who had invested five years in reshaping the company’s cloud service, renting out its computing power and technology to large businesses. Microsoft’s CFO, Amy Hood said that the rise in the consumption of Azure services included such as computing power to run applications and data storage services.

Microsoft said that Azure grew 62% in the fiscal second quarter (Q2) ended December 31, 2019, as compared to 59% in the fiscal first quarter though it had a 76% revenue growth rate last year. Hood told Reuters, “We did have good usage, which matters a ton to that number… The core thing that we focused on – which is consumption growth – was quite good.”

Microsoft officials reported that the revenue for its ‘commercial cloud’ which was the combination of Azure and the cloud-based versions of software such as Office had reached $12.5 billion compared to the last year’s figure of only $9 billion. For the current fiscal year, the commercial cloud gross profit margin was 67% which was 62% in 2019.

Azure’s Competitors of Cloud Service

Wedbush analyst, Dan Ives said in a note, referring to Microsoft’s achievement, “This quarter was an absolute ‘blow out quarter’ across the board with no blemishes and in our opinion speaks to an inflection point in deal flow as more enterprises pick Redmond for the cloud.”

With this development, Hood declared that the company now focused on to invest billions of dollars for improving its core Azure services which primarily rely on its data centers. She mentioned the plans for “hardware improvements and taking advantage of those hardware improvements.”

According to data from Forrester Research, the MSFT shares gained more than 50% in the last year because of the successful cloud operation. The data revealed, “In 2019, Microsoft had a 22% share of the cloud computing infrastructure market, compared with 45% at Amazon and 5% from Google.”

However, Andrew MacMillen of Nucleus Research claimed, “Azure’s renewed growth doesn’t yet pose a threat to AWS’s supremacy in the cloud market, but it does present an opportunity to further close the gap on Amazon and increase its lead over other cloud providers.”

The company’s Intelligent Cloud unit made an estimated revenue of MSFT, it forecasted revenue of $11.9 billion for the unit in contrary to the analyst expectations of $11.4 billion by the end of the fiscal Q3 in March 2020. Following the news, Microsoft shares rose as much as 4.58% to $175.74 in after-hours trading on Wednesday.

I’m Roshan, a journalist, blogger and music lover. I like covering global news related to finance, business, and technology. Focusing on the collection of true and reliable information, I rely on working by conducting interviews with business leaders and talking to the inside sources of companies.

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