Shares of Microsoft Corp were set to open at a record high. The remarkable growth has seen after legacy software business and Azure cloud computing services.
While Microsoft’s core productivity and business processes unit, which includes the Office 365 software suite, rose 13.1 percent to $9.67 billion, revenue for the Azure cloud service jumped 89 percent.
“Based on the results, they were able to beat on all major metrics that people were focusing on. I don’t see anything that should raise an eyebrow of concern”, said Daniel Morgan, a portfolio manager at Synovus Trust who holds 418,716 Microsoft shares.
Microsoft has been investing heavily to bolster the fast-growing cloud business and catch up with market leader Amazon.com Inc’s Amazon Web Services.
It also competes with Alphabet Inc, IBM, and Alibaba.
“Our early investments in the intelligent cloud and intelligent edge are paying off, and we will continue to expand our reach in large and growing markets with differentiated innovation,” Nadella said on a conference call on Thursday.
Analysts expect the investments to pay off in the long run and provide rich dividends to shareholders, allowing Microsoft to rival Apple Inc and Amazon in the race to be the first company worth $1 trillion.
“Our view on MSFT is unchanged: the stock is our favorite large-cap name and we expect MSFT to deliver 10-20% annual stock price appreciation for the next several years,” Canaccord Genuity analyst Richard Davis wrote in a client note.
Of the 35 analysts covering the stock, 31 have a “buy” or higher rating, three are on “hold” and only one on “strong sell”.
“Microsoft has successfully come from behind to exceed Amazon’s cloud revenue, and that gap is only increasing in Microsoft’s favor,” Mark Sami, vice president at consultancy firm SPR said.
“I predict that Microsoft’s cloud market share will continue to grow and impress investors.”
© Thomson Reuters 2018