Microsoft’s cloud computing business grows, stock edges up
0Microsoft’s cloud computing business grows, stock edges up.
Microsoft Corp beat Wall Street’s profit forecast on Wednesday, helped by growth in its cloud computing business, but took a $13.8 billion one-time charge due to the new US tax law. Stock of the world’s largest software company, which have risen almost 50 percent over the past 12 months, initially fell in after-hours trading but later moved into positive territory.
The quarter was the 10th in a row of more than 90 percent revenue growth for its flagship Azure cloud computing service, which directly competes with Amazon.com Inc’s Amazon Web Services. Amazon customers hoping to avoid being locked into one service could be helping growth, said Kim Forrest, an equity analyst at Fort Pitt Capital Group. “If you’re really smart you’ll have not one provider but two,” she said.
Since Chief Executive Satya Nadella took the helm in 2014, Microsoft’s cloud business – which includes products such as Office 365, Dynamic 365 and Azure – has emerged as a major growth area. Revenue from what Microsoft calls its intelligent cloud segment rose 15.3 percent to $7.8 billion in the company’s fiscal second quarter, including 98 percent growth for Azure. Analysts on average had expected $7.51 billion, according to Thomson Reuters I/B/E/S.
Amazon Web Services is the leader of the $14.4 billion cloud computing market with more than 31.8 percent market share, but Azure has been growing fast and holds the No. 2 position with 13.9 percent of the market, according to 2017 third quarter estimates by research firm Canalys.