Whatâs 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, Microsoftâs cloud computing business, âproductivityâ 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 â which make up roughly a third of sales each â did better than expected, with the cloud business even growing faster than it did the quarter before. Put it all together, and Microsoftâs profit beat expectations too. Maybe investors shouldâve seen that coming: the companyâs been on a long run of form, only falling short of analystsâ expectations four times since 2010. Why Should I Care?Zooming in: Everyone knows its name. The pandemic hasnât just boosted demand for Microsoftâs products: itâs lowered its operating costs too. The tech giantâs far-reaching name recognition, after all, makes it a go-to for home-based businesses, which means it hasnât needed to pump as much money into marketing as normal. Of course, the question now is whether itâll hold on to that captive audience when weâre all allowed outside againâŠ
For markets: Thereâs life in the old dog yet. The incoming economic recovery is expected to benefit cheaper-looking âcyclicalâ shares the most,which might be why Big Tech has underperformed the US stock market over the last three months. But Netflixâs better-than-expected results last week mightâve reminded investors thereâs still plenty of growth in tech stocks to be had, and theyâve been piling back in ever since. Thatâs 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. |