Microsoft Q2 Results: Approach Azure And AI Hype With Caution


  • Microsoft is navigating a monumental transition towards an Azure-first cloud computing platform, but most revenue is still from other products.
  • Microsoft posted solid Q2 results by topping guidance in nearly each segment, and restoring faith in Wall Street’s visibility of Azure.
  • Satya Nadella’s vision and execution have been second-to-none, and while AI is in its infancy, early practical use cases are emerging.
  • Despite this success, cloud is expensive to build with a highly uncertain TAM, and Microsoft’s pace of returning capital is average.
  • Investors should be looking forward to what Microsoft builds next, but gain exposure through owning the indices.

Microsoft"s headquarters in Bucharest, Romania


Microsoft (NASDAQ:MSFT) is the gold standard of the software industry, and as the first to report earnings, all eyes are on their numbers to get a read across the sector. Thus far, software has proven resilient to recession fears. But as more layoff

pie chart of Microsoft's business segments

Author / Public Filings

Microsoft results versus guidance

Author / Public Filings

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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.

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