Microsoft 💪🏾
Microsoft reported tonight and did the thing Google couldn't. It beat, cleanly, on both lines.
EPS came in at $4.89 against $4.72 expected. Revenue was $92.28B against $90.61B expected, and the stock is up about 3.5% after hours. In this market, that almost qualifies as a celebration.
But here's the number that actually matters. Azure grew 48%.
Remember the setup going in. Management guided 44 to 45%. Consensus sat around there too. The buy side whisper was 46% or better, and I said a print at guide could still sell off.
Well, it printed 48%, above the guide, above consensus, above the whisper.
That's how you clear a bar. You don't argue with it, you jump over it.
Microsoft Cloud revenue hit $63.9B, up 31% in constant currency. Azure passed $100B in annual revenue last fiscal year, so this is a massive business still growing like a startup.
That combination doesn't happen often.
The other thing, and don't skip this part, is capex came in significantly lower than expected. That's the whole ballgame right now.
Google spent $51.4B in its quarter and printed negative free cash flow, and the market punished it. Microsoft spent less than feared while growing Azure faster than feared.
Growth up, spending discipline intact. That's the exact formula this market is rewarding, because it's the formula that answers the only question anyone is asking anymore: is the AI spend actually turning into money?
Tonight, for Microsoft, the answer was yes.
I hold Microsoft in my RRSP, so again, not a neutral observer. But I'll call it the same either way. This was the cleanest print of the night.
Not financial advice. Just my read.
