Is Microsoft Cloud Computing generating more revenue?

Microsoft (NASDAQ: MSFT) is best known for its operating systems and software products, but the company’s resurgent in recent years is due to its success in cloud computing. With this success, Microsoft’s market capitalization surpassed one trillion dollars in 2019 and rose by more than 55 percent last year, slightly outstinating the S&P 500’s 29 percent gain.
The company’s cloud computing segment is expected to be back in the spotlight, and many market watchers expect the segment to continue to grow as they deliver financial results for the second quarter of 2020 after the close of trading. Wednesday, January 29

Is Microsoft Cloud Computing generating more revenue?

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Ten years after Microsoft introduced Azure Cloud in February 2010, the platform’s rise is phenomenal. Microsoft quickly became the second largest cloud provider after Amazon Web Services (AWS) and continues to grow faster.

In the first quarter, Microsoft said commercial cloud revenue rose 36 percent in annual value to .11.6 billion. The company’s intelligent cloud segment grew 27 percent to 10.8 billion, and Azure grew 59 percent faster than in the previous quarter.

The cloud is now part of Microsoft’s business tripartiality, but some people on Wall Street believe this is just the beginning. At the end of last year, Stiffel Nikolaus analyst Brad Reback pointed out that the transition to the cloud is still in its infancy, and That’s already worth ’17 billion. With Microsoft’s latest victory, such as a 10-billion-DOLLAR deal, cloud computing could be the biggest source of revenue by 2023.
Look for stronger profits from the cloud segment.

It’s not a one-trick pony.

Another factor in Microsoft’s strong growth is the company’s ability to generate recurring revenue from the sale of subscriptions to a number of software products such as Office. Microsoft’s productivity and business process segment was consistent, with first-quarter revenue up 13 percent to 11.1 billion dollars. This included a 13 percent increase in sales of commercial Office products and cloud services compared to the previous year and a 25 percent increase for Office 365.

Microsoft’s more personal computing segment grew at a much slower pace, growing by just 4 percent year-on-year, but still generated sales of 11.1 billion.

Another guide to beat?

Microsoft is forecasting total revenue of between 35.15 billion and 35.95 billion U.S. dollars, up about 9 percent year-on-year. That’s a slowdown from the tech giants’ 14 percent growth in the last quarter. Analysts expect revenue of 35.7 billion dollars (about 10 percent growth) that is close to the upper limit of management’s forecast, while earnings per share are expected to rise by 20 percent.

It is important to note that Microsoft’s management is historically conservative in its guidelines and has overtaken internal estimates for several consecutive quarters. Given its history, Microsoft is not surprised again, beyond its own guidelines.