Microsoft: A Top Bet On Cloud Growth

Summary:

  • Microsoft beat expectations in FQ1 by a wide margin due to strong Cloud performance.
  • Microsoft’s Azure saw 29% Y/Y growth, outperforming Google Cloud.
  • Microsoft generated an impressive free cash flow margin of 36.6% and returned $9.1B to shareholders in Q3.
  • Shares are not cheap, but a strong Cloud enterprise position justifies a continual strong buy rating.

Microsoft France headquarters entrance in Issy les Moulineaux near Paris

Jean-Luc Ichard

Shares of Microsoft (NASDAQ:MSFT) soared 3% immediately (but later dropped) after the technology company presented better-than-expected results for its first fiscal quarter of FY 2024. Microsoft beat expectations, on both the top and bottom line, due to a strong showing of the

$billions

FQ1’24

FQ4’23

FQ3’23

FQ2’23

FQ1’23

Y/Y Growth

Revenues

$56,517

$56,189

$52,857

$52,747

$50,122

13%

Cash Flow From Operating Activities

$30,583

$28,770

$24,441

$11,173

$23,198

32%

Capital Expenditures

($9,917)

($8,943)

($6,607)

($6,274)

($6,283)

58%

Free Cash Flow

$20,666

$19,827

$17,834

$4,899

$16,915

22%

Free Cash Flow Margin

36.6%

35.3%

33.7%

9.3%

33.7%

8%


Analyst’s Disclosure: I/we have a beneficial long position in the shares of MSFT, GOOG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.


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