- Microsoft surged as much as 7% on Wednesday after the software giant's second-quarter earnings beat estimates.
- The company also issued third-quarter guidance that was ahead of estimates and talked up the potential of the metaverse.
- "Nadella & Co. gave a robust cloud guidance 'for the ages' that will calm Street nerves," Wedbush analyst Dan Ives said.
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Microsoft stock surged as much as 7% on Wednesday following the company's fiscal second-quarter earnings report that beat analyst estimates.
Helping boost shares was stronger-than-expected third-quarter guidance, as the software giant's Azure cloud platform continues to drive growth. The company also talked up the potential of the metaverse in its earnings conference call.
Here were the key numbers:
Q2 Revenue: $51.7 billion, versus analyst estimates of $50.8 billion
Q2 EPS: $2.48, versus analyst estimates of $2.32
Azure's Revenue Growth: 46%, versus analyst estimates of 45%
Q3 Revenue Guidance: $48.5 billion to $49.3 billion, versus analyst estimates of $48.2 billion
The solid results acted as a lifeline for the broader stock market, with the Nasdaq 100 jumping as much as 2% on Wednesday after declining about 15% year-to-date.
"Nadella and Co. gave a robust cloud guidance 'for the ages' that will calm [Wall] Street nerves this morning and was a bullish data point for Microsoft and importantly the whole tech sector going forward," Wedbush analyst Dan Ives said.
After accounting for foreign currency fluctuations, he said Microsoft's forecast was "a blowout guide in terms of how investors will digest these numbers." Indeed, Wednesday's price surge added $104 billion to Microsoft's market value.
But the most important metric in the earnings report, according to Ives, was commercial bookings growth accelerating 32% year-over-year. That result speaks to the strength of long-term commitments to the Azure platform, he said.
That growth could continue as Microsoft dives head first into the metaverse, which it touted as a real long-term opportunity for the company on its earnings call.
"The way we see this [metaverse] is as an opportunity in a very classic Microsoft sense, both at the platform infrastructure level and in the application level," CEO Satya Nadella said, adding that Microsoft is bringing the metaverse to its Teams, enterprise, and gaming products.
"Just like the first wave of the internet allowed everybody to build a website, I think the next wave of the internet will be a more open world where people can build their own metaverse world, whether they're organizations or game developers or anyone else," he said.