Oct 26, 2023

The price of MSFT shares jumped by 3% on the day and now points to the $350 resistance level.

msft chart

MSFT (Daily Chart)

Microsoft beat analysts’ expectations with Q1 revenue up 13% to $56.52 billion, $2 billion more than Wall Street expected. Q1 earnings per share were up 27% to $2.99, 35 cents per share above expectations.

The big news was growth in the Intelligent Cloud segment, up 19% to $24.26 billion. Management also guided growth of 26 to 27% in forward guidance for Azure.

This was the first growth in cloud since Q3 2022 and bodes well for the company’s AI plans. Microsoft saw growth in its delivery of packages such as 365 and has the $30 per month AI-driven Copilot tool coming.

“We are rapidly infusing AI across every layer of the tech stack and for every role and business process to drive productivity gains for our customers,” Chief Executive Officer (CEO) Satya Nadella said.

Analysts at Jeffries said Microsoft could take cloud business from Amazon, and they also see Microsoft gaining ground ahead of Google in the AI race. While the two beat Wall Street’s expectations on top- and bottom-line results, Microsoft was the clear winner. Google reported slower-than-anticipated growth in its cloud business, despite diverting a lot of cash to its AI efforts.

“I think what this is telling us is that Microsoft is absolutely in a league of its own when it comes to enterprise software when it comes to tech,” RBC Capital Markets equity analyst Rishi Jaluria told Yahoo Finance.

“It’s an unparalleled year for Microsoft. Who would have thought if we were having this conversation a year ago and I were to tell you, ‘Hey, Microsoft is the leader in big tech AI, not Google,’ you probably would have laughed at me and told me to get off of your show?” Jaluria added.

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