Microsoft reported strong quarterly earnings on Wednesday, beating expectations on both revenue and earnings per share. The company’s success was largely driven by its robust cloud business performance. Despite the positive results, Microsoft stock was down 5% in early Thursday trading after an initial uptick.
Microsoft's Q1 2025 (fiscal) earnings:
• 💻 Windows OEM + devices revenue up 2%
• 👾 Gaming revenue up 43%
• 🕹️ Xbox content + services rev up 61%
• 🎮 Xbox hardware down 29%https://t.co/TCBJ2dUW9u— Tom Warren (@tomwarren) October 30, 2024
Cloud isn’t just renting servers, as Microsoft knows. Why let people use your hardware for whatever they want, when you can only let them use it for whatever you say? https://t.co/Do4SVv1I1l
— Michael Veale @[email protected] (@mikarv) October 31, 2024
The company is facing competitive pressures from Amazon, Google parent Alphabet, and Salesforce, all of which are developing their own AI technologies. “AI-driven transformation is changing work, work artifacts, and workflow across every role, function, and business process,” Microsoft CEO Satya Nadella said in a statement. “We are expanding our opportunity and winning new customers as we help them apply our AI platforms and tools to drive new growth and operating leverage.”
Not many $150B+ revenue businesses growing 22% y/y 💪🏼 $MSFT
“Strong execution by our sales teams and partners delivered a solid start to our fiscal year with Microsoft Cloud revenue of $38.9 billion, up 22% year-over-year"https://t.co/EE9bdv2Rri
— Jeff Richards (@jrichlive) October 30, 2024
For the quarter, Microsoft reported earnings per share of $3.30 on revenue of $65.6 billion, surpassing analyst expectations of $3.10 and $64.5 billion, respectively.
This compares to EPS of $2.99 on revenue of $56.5 billion in the same quarter last year.
Good reminder of how Microsoft moved some business-segment cheese around this summer ahead of today's Q1 FY25 earnings report: https://t.co/FnQL5EfttH pic.twitter.com/sB2rm6NckM
— Mary Jo Foley (@maryjofoley) October 30, 2024
Microsoft stock drops despite strong earnings
The company’s commercial cloud revenue, which includes cloud service sales, was $38.9 billion, exceeding expectations of $38.1 billion.
The Intelligent Cloud segment, including Azure, reported $24.1 billion in revenue, a 20% year-over-year increase. Microsoft attributed 12 points of this growth to its AI services in Azure. Microsoft’s Productivity and Business Processes segment saw revenue of $28.3 billion, a 12% increase year-over-year, encompassing sales of Microsoft 365 services.
The More Personal Computing segment also showed growth, with revenue rising 17% to $13.2 billion, as the PC market starts to recover following a pandemic-induced sales slump. Microsoft, along with its manufacturing partners, is promoting a new range of laptops known as Copilot+ PCs, designed to perform on-device AI processes, representing the PC industry’s response to the AI trend. Over the past year, Microsoft stock has risen about 21%, lagging behind the broader S&P 500’s 37% increase.
In comparison, Alphabet and Amazon both saw their shares rise by 41% during the same period.
Noah Nguyen is a multi-talented developer who brings a unique perspective to his craft. Initially a creative writing professor, he turned to Dev work for the ability to work remotely. He now lives in Seattle, spending time hiking and drinking craft beer with his fiancee.
