Microsoft said sales of its flagship cloud product doubled in its first quarter, propelling earnings above analysts’ estimates.
This sent its shares to an all-time high, breaking past a level hit in 1999 at the peak of the tech stock bubble. The company’s shares have doubled since August 2013 with chief executive Satya Nadella restoring investor confidence by focusing on mobile and cloud computing rather than PCs.
Long known for its Windows software, Microsoft has shifted focus to the cloud where it is dueling with larger rival Amazon.com Inc to control the still fledgling market. Its jump in revenue underscores how businesses around the world are turning to new applications in the cloud and leaving once critical software programs and other hardware in the dust.
Shares of Microsoft rose as much as 6.2% to $60.79 in after-hours trading. They later pared gains to $60.43, still adding nearly $25 billion to its market value. The company said sales from its flagship cloud product Azure, which businesses can use to host their websites, apps or data, rose 116%.
Revenue for its broader “Intelligent Cloud” business rose 8.3% to $6.38 billion, beating analysts’ average estimate of $6.27 billion, according to research firm FactSet StreetAccount. The company forecast that sales for its Intelligent Cloud business will be between $6.55 billion and $6.75 billion in the current quarter, compared with $6.34 billion in the same period a year earlier.
Early investment in the cloud, coupled with machine learning and applications that can scale at different levels, have set Microsoft and Amazon Web Services apart from smaller rivals – and precipitated the decline of older software companies