Software leader Microsoft (MSFT) late Tuesday smashed Wall Street’s targets for its fiscal second quarter thanks to growth from its cloud computing businesses. The earnings news pushed Microsoft stock higher in extended trading.
The Redmond, Wash.-based company earned $2.03 a share on sales of $43.08 billion in the quarter ended Dec. 31. Analysts expected Microsoft earnings of $1.64 a share on sales of $40.18 billion. On a year-over-year basis, Microsoft earnings rose 34% while sales climbed 17%.
Revenue from Microsoft’s commercial cloud offerings rose 34% year over year to $16.7 billion in the quarter.
“What we have witnessed over the past year is the dawn of a second wave of digital transformation sweeping every company and every industry,” Chief Executive Satya Nadella said in a news release.
Microsoft Stock Breaks Out Ahead Of Earnings Report
For the current quarter, Microsoft expects sales of $40.8 billion, based on the midpoint of its outlook. Wall Street was looking for revenue in the March quarter of $38.7 billion. In the year-earlier quarter, Microsoft posted sales of $35.02 billion.
In after-hours trading on the stock market today, Microsoft stock jumped 5%, near 244. During the regular session Tuesday, Microsoft stock advanced 1.2% to 232.33.
In morning trading Tuesday, Microsoft stock broke out of a 22-week consolidation period at a buy point of 232.96, according to IBD MarketSmith charts.
Azure Infrastructure Sales Surge 50%
Revenue in Microsoft’s Intelligent Cloud business unit increased 23% to $14.6 billion in the fiscal second quarter. The unit includes server software and cloud services. Revenue from Azure cloud infrastructure services rose 50% in the period. That beat Wall Street’s consensus estimate for 41% Azure growth. It also accelerated from 48% growth in the September quarter.
Microsoft’s Productivity and Business Processes unit saw sales rise 13% to $13.4 billion. That division includes Office productivity software as well as the Dynamics and LinkedIn businesses.
Microsoft’s More Personal Computing unit posted a 14% increase in sales to $15.1 billion in the December quarter. That unit includes Windows software, Xbox video games, Surface computers and search advertising.
MSFT Stock On Two IBD Stock Lists
“In a nutshell, these were blowout numbers,” Wedbush Securities analyst Daniel Ives said in a note to clients. “The cloud growth party is just getting started, in our opinion, led by Microsoft.”
Microsoft stock is in IBD’s prestigious Leaderboard watchlist as well as the IBD Long-Term Leaders Portfolio.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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