Microsoft’s Shares Rebound as Forecast Focuses on Cloud Growth

Microsoft’s Shares Rebound as Forecast Focuses on Cloud Growth

Bloomberg

Microsoft Corp. shares rose in late trading, reversing an earlier decline, after the software giant gave a forecast that reassured investors the company’s Azure cloud-computing business still has potential to drive growth.

Earlier, Microsoft had reported quarterly sales that topped $50 billion for the first time and profit that exceeded analysts’ estimates, fueled by cloud, gaming and Windows software. Still, Azure revenue decelerated from recent quarters, sending the stock tumbling more than 5%.

Then, on a conference call, the company forecast the closely watched Azure revenue growth rate would pick up in the fiscal third quarter from the second, excluding the impact of currency fluctuations. The stock rose as much as 3.9%. Despite the earlier concerns, the Azure forecast will be “front and center tomorrow morning,” Dan Ives, an analyst at Wedbush, said. “This will help calm Street tech growth worries.”

Investors on Tuesday initially focused on the 46% increase at the company’s cloud unit, which fell short of the rosiest estimates and lagged behind gains for the two prior periods.