Earnings and revenue that beat Wall Street expectations sparked a surge in Microsoft’s stock price during after-hours trading Wednesday, lifting the company’s market cap to more than $1 trillion.
Earnings came in at $1.14 per share – 14 cents more than expected. And revenue totalled $30.6 billion, nearly a billion more than analysts projected, according to CNBC.
The news sent shares past $130.
CNBC reported that Microsoft’s performance led to positive comment from analyst firm Stiefel, especially the giant’s 73 percent surge from its Azure cloud business.
“While Azure is still much smaller than rival Amazon Web Service, Stifel analysts say it’s growing faster than AWS was at a similar size,” CNBC reported.
“We continue to believe the shift to the cloud will be additive to Microsoft given a broader portfolio of products with deeper functionality as well as Microsoft’s ability to enter new categories where it did not compete previously,” said Stifel’s Brad Reback in a research note, according to CNBC. He has a buy rating on the stock.
The Associated Press noted that Microsoft’s ongoing push to get automakers, retailers and other businesses onto its cloud computing platform helped power the company’s third-quarter earnings.
The software maker posted fiscal third-quarter earnings of $8.8 billion, up 19% from the same period last year.
Amid a decline in its legacy Windows software business, much of Microsoft’s growth in recent years has come from selling its cloud services to other businesses and governments.
Microsoft Chief Financial Officer Amy Hood said in a statement Wednesday that revenue from the company’s “commercial cloud” segment grew 41 percent year-over-year to $9.6 billion.
ExxonMobil announced in February a deal to tap into Microsoft’s cloud platform and artificial intelligence to capitalize on the shale oil boom in Texas and New Mexico.
Microsoft is battling Amazon for a multibillion contract to supply the U.S. military with cloud computing services. The Pentagon could award the contract as early as this summer. Microsoft has already won a smaller $480 million contract to build HoloLens augmented reality headsets for soldiers.
In the gaming sector, Microsoft said Wednesday that revenue from its Xbox division grew 5%, with 12% growth in software and services offsetting a decline in hardware sales. The company is preparing to launch its first diskless console next month as it braces for increasing competition from new forms of gaming, such as a Google’s console-free game streaming service due out later this year.
Microsoft shares have risen 23 percent since the beginning of the year, while the Standard & Poor’s 500 index has risen 17 percent. In the final minutes of trading on Wednesday, shares hit $125.07, an increase of 34 percent in the last 12 months.
Microsoft said Wednesday it returned $7.4 billion in the quarter to shareholders in the form of share repurchases and dividends.
