Why Microsoft Stock Jumped Today

What happened

Shares of Microsoft (MSFT 0.28%) climbed 6% on Wednesday after the tech titan’s growth forecast helped ease investor fears.

So what

Microsoft’s revenue rose 12% year-over-year to $51.9 billion in the fourth quarter of fiscal 2022, which ended June 30. The gains were driven by strong growth in the software giant’s Azure cloud infrastructure platform. Sales in this key segment jumped 40%. “In a dynamic environment, we saw strong demand, gained market share and increased customer engagement with our cloud platform,” Chief Financial Officer Amy Hood said in a press release.

However, Microsoft’s results were negatively impacted by a sharp drop in global personal computer (PC) sales. Although its Office 365 commercial and consumer revenue both increased 9%, Microsoft’s Windows OEM revenue declined 2%.

The coronavirus-related shutdowns in China, a slowing advertising market and unfavorable currency fluctuations further weighed on Microsoft’s earnings. Yet Microsoft was able to increase its operating profit by 8% to $20.5 billion, despite these challenges.

Now what

At the start of the quarter, investors feared that Microsoft’s growth could slow significantly due to the potential for inflation – and the Federal Reserve’s moves to tame it – to drag the economy into a deep and prolonged recession. But Hood helped allay those fears during the company’s conference call. She said Microsoft expects to deliver “double-digit growth in revenue and operating income” in fiscal 2023. This expected pace of expansion was higher than expected by many investors.

“As we begin a new fiscal year, we remain committed to balancing operational discipline with continued investments in key strategic areas to drive future growth,” Hood said.