What’s Going On Here?At least those awkward virtual company socials have been paying off for someone: Microsoft reported better-than-expected quarterly earnings late on Tuesday, and its stock initially jumped 6%. What Does This Mean?With the world spending all day, every day in their own homes, Microsoft’s cloud computing business, “productivity” segment (think Microsoft Office and LinkedIn), and personal computing division (think XBox and Windows) have unsurprisingly been in high demand. And it showed: all three divisions – which make up roughly a third of sales each – did better than expected, with the cloud business even growing faster than it did the quarter before. Put it all together, and Microsoft’s profit beat expectations too. Maybe investors should’ve seen that coming: the company’s been on a long run of form, only falling short of analysts’ expectations four times since 2010. Why Should I Care?Zooming in: Everyone knows its name.
The pandemic hasn’t just boosted demand for Microsoft’s products: it’s lowered its operating costs too. The tech giant’s far-reaching name recognition, after all, makes it a go-to for home-based businesses, which means it hasn’t needed to pump as much money into marketing as normal. Of course, the question now is whether it’ll hold on to that captive audience when we’re all allowed outside again…
For markets: There’s life in the old dog yet.
The incoming economic recovery is expected to benefit cheaper-looking “cyclical” shares the most,which might be why Big Tech has underperformed the US stock market over the last three months. But Netflix’s better-than-expected results last week might’ve reminded investors there’s still plenty of growth in tech stocks to be had, and they’ve been piling back in ever since. That’s worked out especially well for Microsoft: its share price is now just shy of all-time highs, and there isn't a single analyst at a major investment bank who recommends selling the stock. | 
