Microsoft (MSFT) reported after the close and was trading around 3% higher after hours, after delivering another strong quarter led by Azure and broader cloud growth.
Key Q1 highlights:
- Revenue: US$92.28bn vs US$90.63bn expected.
- Adjusted EPS: US$4.89 vs US$4.73 expected.
- Azure growth: +48% ex-FX vs +44.8% expected.
- Microsoft Cloud revenue: US$63.9bn vs US$61.62bn expected.
- Operating income: US$45.92bn vs US$43.92bn expected.
- Capex: US$39.37bn vs US$45.93bn expected.
Azure was clearly the standout, reinforcing that Microsoft remains one of the biggest beneficiaries of enterprise AI spending. Importantly, the company continues to show that its huge infrastructure investment is translating into very strong revenue growth rather than simply higher costs.
The capex debate remains central, but this quarter was helpful because spending came in below expectations while cloud growth exceeded forecasts.
MM’s view: We own MSFT and continue to like it. Azure growth remains exceptional, the broader cloud franchise is performing strongly, and Microsoft continues to show a relatively disciplined approach to AI investment. The valuation remains full, but the earnings quality and visibility are difficult to match.
MM remains long and bullish MSFT ~$US530
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