The demand for cloud computing services, which drove Microsoft’s prediction of double-digit revenue growth this fiscal year, sent its shares up 5% on Tuesday.
The positive prediction, which comes as investors prepare for an economic slump due to inflation surging and consumers cutting back on spending, shows Microsoft is still benefiting from the move to hybrid work models driven by the epidemic.
Microsoft’s estimate, according to Bob O’Donnell, an analyst for TECHnalysis Research, reveals that businesses are still shifting more work and business online despite the bad economic trends.
Regarding the forecast, he added, “I don’t think it’s specific to Microsoft.” Because of the variety of businesses it operates in and the crucial role that its software and computing services play for organisations, Microsoft is in an exceptional position.
Microsoft is under pressure from a rising dollar since it generates nearly half of its revenue outside of the US.
As a result, the business lowered its expectations for revenue and earnings for the fourth quarter in June.
Iversen told Reuters that if it weren’t for the stronger currency, the company’s 12 percent year-over-year revenue increase would have been 4 percentage points higher.
The fourth quarter’s revenue was down by three major causes by nearly $1 billion.
A downturn in the PC industry reduced Windows OEM revenue by more than US$300 million; foreign exchange had a negative impact on revenue of about US$600 million; and a slowdown in advertising expenditures reduced LinkedIn, Search, and news ad income by more than US$100 million.
Microsoft announced fourth-quarter sales of US$51.87 billion, up from US$46.15 billion a year earlier.