Latest news with #JonathanNeilson
&w=3840&q=100)
Business Standard
01-05-2025
- Business
- Business Standard
Microsoft forecasts strong growth for Azure cloud business, shares surge 8%
Microsoft forecast on Wednesday stronger-than-expected quarterly growth for its cloud-computing business Azure after blowout results in the latest quarter, assuaging investor worries in an uncertain economy and lifting its shares 8 per cent after hours. Microsoft's results, which follow similarly above-expectations outcomes from Google last week, could ease concerns about a potential slowdown in AI demand, after some analysts pointed to canceled data-center leases at Microsoft as a sign of excess capacity. Investors had also been worried about the fallout from sweeping US tariffs that are prompting businesses to rein in spending. Microsoft said revenue at its Azure cloud division rose 33 per cent in the third quarter ended March 31, exceeding estimates of 29.7 per cent, according to Visible Alpha. AI contributed 16 percentage points to the growth, up from 13 points in the previous quarter. The company also forecast cloud-computing revenue growth of 34 per cent to 35 per cent on a constant currency basis for the fiscal fourth quarter, well above analyst estimates of 31.8 per cent, according to data from Visible Alpha. The company forecast revenue for its intelligent cloud segment between $28.75 billion and $29.05 billion, with the entire range above analyst estimates of $28.52 billion, according to LSEG data. The company said its commercial bookings growth - which reflects new infrastructure and software contracts signed by business customers - was up 18 per cent in the fiscal third quarter, driven in part by a new Azure contract with ChatGPT creator OpenAI. Microsoft declined to comment on the size of the deal or what role it played in overall Azure sales growth. "In a quarter clouded by tariff fears and AI spending scrutiny, this quarter is a clear win - even if it wasn't fireworks," said Jeremy Goldman, senior director of briefings at E-marketer. "Azure and other cloud services beat Street expectations - and Microsoft Cloud’s growth shows it continues to turn AI infrastructure into margin-friendly growth. Still, investors will be watching closely as the company continues to pull back on data center expansion." In the third quarter, Microsoft's capital expenditures rose 52.9 per cent to $21.4 billion, less than estimates of $22.39 billion, according to Visible Alpha. However, the proportion of longer-lived asset expenditures fell to about half of the total. Jonathan Neilson, Microsoft's vice president of investor relations, said that reflected a shift in Microsoft's spending from long-lived assets such as data center buildings toward more spending on shorter-lived assets such as chips. "You plug in CPUs and GPUs, and then you can start recognizing revenue," Neilson said, referring to categories of chips made by Intel, Advanced Micro Devices and Nvidia, among others. The Intelligent Cloud unit, which houses Azure, posted revenue of $26.8 billion, compared with expectations of $26.17 billion. Overall, revenue rose 13 per cent to $70.1 billion, beating estimates of $68.42 billion, according to data compiled by LSEG. Redmond, Washington-based Microsoft reported a profit of $3.46 per share in the quarter, beating expectations of $3.22 per share. The company also benefited from a 6 per cent increase in revenue at its more personal computing unit, which includes Xbox and its line of laptops. Microsoft, which has also repeatedly said it is capacity constrained on AI, has been pouring billions into building its AI infrastructure and expanding its data-center footprint. A senior Microsoft executive reiterated earlier this month that the company would spend $80 billion on its data center build-out this year, and investors will be watching closely to see if it reaffirms that on its post-earnings call. A pullback in Big Tech's AI spending will have big implications for suppliers such as chip giant Nvidia, as well as the US economy. J.P. Morgan analysts estimated in January that data-center spending could contribute between 10 and 20 basis points to US economic growth in 2025-2026. Neilson said inventory levels had already been high during the company's fiscal second quarter as retailers stocked up on computers and gaming consoles on tariff worries. That activity continued into the third quarter, he said. "We expected in Q3 for them to bring inventory levels down to a more normal level. What we actually saw was inventory levels remained elevated," Neilson said. "There continues to be some uncertainty there."
Business Times
30-04-2025
- Business
- Business Times
Microsoft posts strong results fuelled by cloud sales growth
[NEW YORK] Microsoft reported stronger-than-expected quarterly sales and profit growth, suggesting customer demand for cloud services has held steady despite a wave of new tariffs and economic turbulence. Total revenue in the fiscal third quarter increased 13 per cent to US$70.1 billion, while adjusted profit was US$3.46 a share, the company said on Wednesday (Apr 30). Analysts on average estimated sales of US$68.5 billion and adjusted per-share earnings of US$3.21. The world's largest software maker is considered a leader in commercialising artificial intelligence (AI) products, thanks to its close partnership with ChatGPT maker OpenAI. In addition to providing computing infrastructure, Microsoft has launched AI assistants in widely used productivity applications such as Office and Excel. The Azure cloud unit, which sells computing power and other services, posted a 33 per cent revenue gain in the quarter, beating the Wall Street estimate of 29 per cent. The company said a new cloud commitment from OpenAI helped drive bookings. Microsoft shares rose about 6 per cent in extended trading after closing at US$395.26 in New York. The company's stock was down about 6 per cent this year to the Wednesday close as part of a broader market selloff. Like its peers and Alphabet, Microsoft has raced to construct enough data centres to meet the spiking demand for generative AI training and tools. But in recent months, it has slowed some of these development efforts, leading investors to debate whether this is an indication of financial prudence or lower long-term demand for cloud and AI. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Third-quarter capital expenditures including leases, an indication of data centre spending, came in at US$21.4 billion. That's less than the company spent the prior quarter, the first such decline in more than two years. These investments are meant to fuel growth in the company's cloud-computing business. The company attributed 16 percentage points of Azure's third-quarter growth to AI, compared with 13 points in the prior quarter. Sales in Microsoft's unit containing business applications grew 10 per cent to US$29.9 billion. That was just ahead of the average analyst estimate of US$29.7 billion. Microsoft is working to convince customers to upgrade to more expensive tiers of its software to use the latest AI features, including its Copilot assistants. Those upgrades have helped the company generate more revenue per user, investor relations chief Jonathan Neilson said. The threat of changing US government policy, from tariffs to federal cost-cutting efforts, have rattled business leaders and investors in recent weeks. While tariffs do not impact software makers directly, they can hurt demand from customers and increase costs across the economy. As a large software company, Microsoft's 'not as subject to all the worries we see in the tech space', Dan Morgan, senior portfolio manager at Synovus Trust, said. The company 'beat on every major metric'. Microsoft has some direct exposure to hardware businesses through its Xbox gaming console and Surface laptops. The unit containing these products reported a 6 per cent gain to US$13.4 billion in the third quarter, ahead of the average estimate of US$12.7 billion. BLOOMBERG
CNA
30-04-2025
- Business
- CNA
Microsoft forecasts strong growth for Azure cloud business, shares surge 8%
Microsoft forecast on Wednesday stronger-than-expected quarterly growth for its cloud-computing business Azure after blowout results in the latest quarter, assuaging investor worries in an uncertain economy and lifting its shares 8 per cent after hours. Microsoft's results, which follow similarly above-expectations outcomes from Google last week, could ease concerns about a potential slowdown in AI demand, after some analysts pointed to canceled data-center leases at Microsoft as a sign of excess capacity. Investors had also been worried about the fallout from sweeping U.S. tariffs that are prompting businesses to rein in spending. Microsoft said revenue at its Azure cloud division rose 33 per cent in the third quarter ended March 31, exceeding estimates of 29.7 per cent, according to Visible Alpha. AI contributed 16 per centage points to the growth, up from 13 points in the previous quarter. The company also forecast cloud-computing revenue growth of 34 per cent to 35 per cent on a constant currency basis for the fiscal fourth quarter, well above analyst estimates of 31.8 per cent, according to data from Visible Alpha. The company forecast revenue for its intelligent cloud segment between $28.75 billion and $29.05 billion, with the entire range above analyst estimates of $28.52 billion, according to LSEG data. The company said its commercial bookings growth - which reflects new infrastructure and software contracts signed by business customers - was up 18 per cent in the fiscal third quarter, driven in part by a new Azure contract with ChatGPT creator OpenAI. Microsoft declined to comment on the size of the deal or what role it played in overall Azure sales growth. "In a quarter clouded by tariff fears and AI spending scrutiny, this quarter is a clear win - even if it wasn't fireworks," said Jeremy Goldman, senior director of briefings at E-marketer. "Azure and other cloud services beat Street expectations - and Microsoft Cloud's growth shows it continues to turn AI infrastructure into margin-friendly growth. Still, investors will be watching closely as the company continues to pull back on data center expansion." In the third quarter, Microsoft's capital expenditures rose 52.9 per cent to $21.4 billion, less than estimates of $22.39 billion, according to Visible Alpha. However, the proportion of longer-lived asset expenditures fell to about half of the total. Jonathan Neilson, Microsoft's vice president of investor relations, said that reflected a shift in Microsoft's spending from long-lived assets such as data center buildings toward more spending on shorter-lived assets such as chips. "You plug in CPUs and GPUs, and then you can start recognizing revenue," Neilson said, referring to categories of chips made by Intel, Advanced Micro Devices and Nvidia, among others. The Intelligent Cloud unit, which houses Azure, posted revenue of $26.8 billion, compared with expectations of $26.17 billion. Overall, revenue rose 13 per cent to $70.1 billion, beating estimates of $68.42 billion, according to data compiled by LSEG. Redmond, Washington-based Microsoft reported a profit of $3.46 per share in the quarter, beating expectations of $3.22 per share. The company also benefited from a 6 per cent increase in revenue at its more personal computing unit, which includes Xbox and its line of laptops. Microsoft, which has also repeatedly said it is capacity constrained on AI, has been pouring billions into building its AI infrastructure and expanding its data-center footprint. A senior Microsoft executive reiterated earlier this month that the company would spend $80 billion on its data center build-out this year, and investors will be watching closely to see if it reaffirms that on its post-earnings call. A pullback in Big Tech's AI spending will have big implications for suppliers such as chip giant Nvidia, as well as the U.S. economy. J.P. Morgan analysts estimated in January that data-center spending could contribute between 10 and 20 basis points to U.S. economic growth in 2025-2026. Neilson said inventory levels had already been high during the company's fiscal second quarter as retailers stocked up on computers and gaming consoles on tariff worries. That activity continued into the third quarter, he said. "We expected in Q3 for them to bring inventory levels down to a more normal level. What we actually saw was inventory levels remained elevated," Neilson said. "There continues to be some uncertainty there."
CNA
30-04-2025
- Business
- CNA
Microsoft beats revenue estimates as AI shift bolsters cloud demand
Microsoft topped quarterly revenue expectations on Wednesday, helped by strong growth at its cloud-computing business Azure, reassuring tech investors that hefty AI investments were paying off and sending shares of the company nearly 6 per cent higher in after-hours trading. Microsoft's results, which follow similarly above-expectations outcomes from Google last week, could ease concerns about a potential slowdown in AI demand, after some analysts pointed to canceled data-center leases at Microsoft as a sign of excess capacity. Investors had also been worried about the fallout from sweeping U.S. tariffs that are prompting businesses to rein in spending. Microsoft said revenue at its Azure cloud division rose 33 per cent in the third quarter ended March 31, exceeding estimates of 29.7 per cent, according to Visible Alpha. AI contributed 16 per centage points to the growth, up from 13 points in the previous quarter. The company said its commercial bookings growth - which reflects new infrastructure and software contracts signed by business customers - was up 18 per cent in the fiscal third quarter, driven in part by a new Azure contract with ChatGPT creator OpenAI. Microsoft declined to comment on the size of the deal or what role it played in overall Azure sales growth. "In a quarter clouded by tariff fears and AI spending scrutiny, this quarter is a clear win - even if it wasn't fireworks," said Jeremy Goldman, senior director of briefings at E-marketer. "Azure and other cloud services beat Street expectations - and Microsoft Cloud's growth shows it continues to turn AI infrastructure into margin-friendly growth. Still, investors will be watching closely as the company continues to pull back on data center expansion." In the third quarter, Microsoft's capital expenditures rose 52.9 per cent to $21.4 billion, less than estimates of $22.39 billion, according to Visible Alpha. However, the proportion of longer-lived asset expenditures fell to about half of the total. Jonathan Neilson, Microsoft's vice president of investor relations, said that reflected a shift in Microsoft's spending from long-lived assets such as data center buildings toward more spending on shorter-lived assets such as chips. "You plug in CPUs and GPUs, and then you can start recognizing revenue," Neilson said, referring to categories of chips made by Intel, Advanced Micro Devices and Nvidia, among others. The Intelligent Cloud unit, which houses Azure, posted revenue of $26.8 billion, compared with expectations of $26.17 billion. Overall, revenue rose 13 per cent to $70.1 billion, beating estimates of $68.42 billion, according to data compiled by LSEG. Redmond, Washington-based Microsoft reported a profit of $3.46 per share in the quarter, beating expectations of $3.22 per share. The company also benefited from a 6 per cent increase in revenue at its more personal computing unit, which includes Xbox and its line of laptops. Microsoft, which has also repeatedly said it is capacity constrained on AI, has been pouring billions into building its AI infrastructure and expanding its data-center footprint. A senior Microsoft executive reiterated earlier this month that the company would spend $80 billion on its data center build-out this year, and investors will be watching closely to see if it reaffirms that on its post-earnings call. A pullback in Big Tech's AI spending will have big implications for suppliers such as chip giant Nvidia, as well as the U.S. economy. J.P. Morgan analysts estimated in January that data-center spending could contribute between 10 and 20 basis points to U.S. economic growth in 2025-2026. Neilson said inventory levels had already been high during the company's fiscal second quarter as retailers stocked up on computers and gaming consoles on tariff worries. That activity continued into the third quarter, he said. "We expected in Q3 for them to bring inventory levels down to a more normal level. What we actually saw was inventory levels remained elevated," Neilson said. "There continues to be some uncertainty there."
