(Un)Expected Results

(Un)Expected Results

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  • Microsoft's (MSFT) second quarter was a mixed bag: it earned $52.7 billion in revenue, which was up 2% from last year, but a slight miss from the $52.9 billion analysts expected. Profits also fell by 12% to $16.4 billion, a trend that may continue throughout the year. The cloud market stayed steady, reassuring investors that big tech companies' revenue streams won't be too impacted by customers' budget cuts. This was reflected in the Q2 results, where cloud revenue offset weaker PC sales.

  • Despite the faltering PC market, Microsoft has been riding high on cloud revenues for years, and that seems to be continuing, its intelligent cloud business was up 18% from last year, reaching $21.5 billion. Microsoft is investing $10 billion in OpenAI's ChatGPT, adding it to Azure OpenAI and integrating it into Bing, signaling AI will play a major role in its future projects.

Why it matters

Microsoft recently joined other big tech companies in turning to layoffs to ride out harder times, announcing last week it was cutting over 10,000 jobs. Amy Hood, the company’s finance chief, said the PC market will contract again, while CEO Satya Nadella added that customers are looking to save money through optimization of existing workloads, and they’re also being more cautious about new workloads.


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