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Strong Profits Gives Microsoft’s Stock a Big Lift

October 26, 2017, 8:45 PM UTC

Microsoft reported a better-than-expected quarterly profit on Thursday as demand for its cloud computing services for companies rose and personal computer software business stabilized.

Shares of the technology giant were up 1.76% at $80.15 in trading after the bell.

Microsoft’s focus on fast-growing cloud applications and platforms is helping it beat slowing demand for personal computers that has hurt sales of Windows – the software that powered the company to the top during the dot-com boom. Under CEO Satya Nadella, Microsoft’s cloud business – which includes products such as Office 365, Dynamic 365 and the flagship Azure computing platform – has emerged as a major growth driver. Revenue from Microsoft’s intelligent cloud business rose nearly 14% to $6.92 billion in the first quarter ended Sept. 30. Analysts on average had expected $6.70 billion, according to financial data and analytics firm FactSet.

Revenue from Azure, which competes with Inc’s Amazon Web Services and offerings from Alphabet’s Google, IBM and Oracle, grew 90% compared to a 97% growth rate in the preceding quarter.

Microsoft said commercial cloud annualized revenue run rate reached $20.4 billion in the quarter.

Revenue from Microsoft’s personal computing division, its largest by revenue, fell 0.2% to $9.38 billion but handily beat analysts’ estimate of $8.81 billion.

The unit includes Windows software, Xbox gaming consoles, online search advertising and Surface personal computers.

The technology giant’s net income rose to $6.58 billion, or 84 cents per share, in the first quarter ended Sept. 30, from $5.67 billion, or 72 cents per share, a year earlier.

Revenue rose 12% to $24.54 billion. Microsoft’s shares had risen nearly 27% this year through Thursday, eclipsing the 14.4% gain in the broader S&P 500.