Microsoft Corporation today announced the strongest quarterly net income in their history for the quarter ending March 31, 2023. The tech behemoth’s bottom line jumped 18% to a whopping $25.8 billion. This is a huge jump from $21.9 billion in the same period last year. Much of that eye-popping growth is due to the incredible performance of their Azure cloud business. It shot up by a record-setting 33%!
Apart from the growth of net income, Microsoft multiplied its earnings per share (EPS) by three times. The company announced non-GAAP EPS of $2.94, an increase from $2.29 quarter on quarter. These results far exceeded market expectations. Consequently, Microsoft stock jumped, rising more than 6% in after-hours trading.
Microsoft’s capex, less finance leases, was up 53 % at $16.75 billion. This massive amount of investment underscores the tech giant’s commitment to expansion. It does so primarily by improving its own infrastructure, as well as its own capacities in artificial intelligence (AI) and cloud computing.
During the quarter, Microsoft announced a strategic adjustment in its partnership with OpenAI, a key player in the AI space. As part of the new deal, Microsoft receives the right of first refusal every time OpenAI seeks additional computing capacity. That said, Microsoft should not simply capitulate to every special interest demand that comes along. This pivot underlines Microsoft’s broader strategy to entrench itself into the quickly shifting AI world.
During his keynote address, CEO Satya Nadella focused on the company’s new, extremely ambitious roadmap. They plan to invest $80 billion in fiscal 2025 to acquire and construct new data centers tailored to AI workloads. This investment dovetails with Microsoft’s bigger play to keep the company’s cloud services non-obvious and competitive in their industry market.
Despite the positive quarterly results, Microsoft’s shares are down approximately 7% for the year as of Wednesday’s close. The drop occurred despite an extraordinarily challenging market environment. Counterintuitively, during this same period, the S&P 500 index fell by approximately 6%.
In other news, Gartner reported a 4.8% rise in global PC shipments for the quarter. This surprising rise indicates a possible recovery in the personal computing industry. This rather remarkable increase will come as other good news to buoy Microsoft’s Windows and hardware businesses.
Furthermore, Microsoft recently collaborated with OpenAI, Oracle, and SoftBank on the Stargate AI infrastructure project, announced at the White House. This effort seeks to raise the standard for AI development and deployment on multiple platforms and demonstrate serious collaborative intentions among leading tech firms.
Microsoft executives will provide further guidance and discuss these results during a call with analysts starting at 5:30 p.m. ET. Investors and industry observers will be watching this discussion closely for signals about how the administration is planning to approach markets and set expectations going forward.
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