Beautiful Virgin Islands

Thursday, Jun 05, 2025

Microsoft soothes market fears with forecast for double-digit revenue growth

Microsoft soothes market fears with forecast for double-digit revenue growth

Microsoft Corp (MSFT.O) on Tuesday forecast revenue this fiscal year would grow by double digits, driven by demand for cloud computing services and sending shares up 5%.
The strong outlook shows Microsoft continues to benefit from the pandemic-led shift to hybrid work models and comes at a time when investors are bracing for an economic downturn, with inflation roaring and consumers cutting spending.

Bob O’Donnell, an analyst for TECHnalysis Research, said Microsoft's forecast shows that despite the negative economic trends, companies continue to move more business and work online.

"I don't think it's unique to Microsoft," he said about the outlook. "Microsoft is extraordinarily well positioned because of the range of businesses it has and the critical role their software and computing services play for organizations."

Despite the positive forecast for the fiscal year starting July 1, Microsoft results for the fourth quarter amounted to a slight miss, hurt by a stronger dollar, slowing sales of PCs and lower advertiser spending.

Still Microsoft had its best quarter for its cloud business with record bookings for its cloud service called Azure, said Brett Iversen, Microsoft's general manager of investor relations.

Azure growth was 40%, missing the 43% analyst target compiled by Visible Alpha. It was up 46% if foreign exchange factors are eliminated. In its broader Intelligent Cloud division, revenue was up 20% to $20.9 billion, ahead of the average Wall Street target of $19.1 billion, according to Refinitiv.

For the first quarter ending Sept. 30, the Intelligent Cloud division was forecast to bring in $20.3 billion to $20.6 billion, with the upper end slightly above analysts' forecasts.

"We are seeing larger and longer-term commitments and won a record number of $100 million-plus and $1 billion-plus deals this quarter," said CEO Satya Nadella. "We have more data center regions than any other provider and we will launch 10 regions over the next year."

Microsoft faces pressure from a stronger greenback as it gets about half of its revenue from outside the United States. That led the company to lower its fourth-quarter profit and revenue forecasts in June. Shares of the Redmond, Washington-based company have fallen about 25% this year.

The U.S. dollar index rose over 2% in the quarter ended June and nearly 12% this year, compared to a 1% drop a year earlier for the same period.

Without the stronger dollar, the company's 12% year-on-year revenue growth would have been 4 percentage points higher, Iversen told Reuters. Three main factors reduced fourth-quarter revenue by about $1 billion.

Foreign exchange negatively impacted revenue by nearly $600 million. A slowdown in the PC market hit Windows OEM revenue by over $300 million. And advertising spend slowdown hit LinkedIn and Search and news ad revenue by over $100 million.

"With Microsoft being the size that they are, it's hard for them not to reflect the overall economy," John Freeman, vice president of equity research at CFRA Research. "We've got inflation and that's obviously going to dampen consumer demand."

Softer consumer demand also hit gaming revenue, which fell 7% year-on-year due to a drop in Xbox hardware, content and services, the company said. It is expected to fall in the low to mid-single digits this quarter, driven by declines in first-party content.

Microsoft reported revenue of $51.87 billion in the fourth quarter, compared with $46.15 billion a year earlier. Analysts on average had expected revenue of $52.44 billion, according to Refinitiv IBES data.

Net income rose to $16.74 billion, or $2.23 per share, during the quarter ended June 30, from $16.46 billion, or $2.17 per share, a year earlier.
Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Global News Roundup: From Ukraine's strategic military strikes and Russia's demands and Tensions Escalate in Ukraine, to serious legal issues faced by Britons in Bali and Trump's media criticism, the latest developments highlight a turbulent landscape
Majority of French Voters View Macron's Presidency as a Failure
Hungary Partners with China to Boost Electric Vehicle Production
‘Vibe Coding’ Emerges as the New DIY Trend
AI Pioneer Yoshua Bengio Warns Models Can Deceive Users
Big Four Firms Rush to Create AI Auditing Systems
Musk’s xAI Pursues $113 Billion Valuation in New Share Sale
Walmart Increases Revenue Despite Shrinking Workforce
Hims & Hers Plans UK and EU Launch of Replica Obesity Drugs
Toyota to Acquire Supplier in $33 Billion Buyout
U.S. Reduces Military Presence in Syria
Trump Demands Iran End All Uranium Enrichment in Nuclear Talks
China Accuses US of Violating Trade Truce
Panama Port Owner Balances US-China Pressures
France Implements Nationwide Outdoor Smoking Ban to Protect Children
German Chancellor Merz Keeps Putin Guessing on Missile Strategy
Mandelson Criticizes UK's 'Fetish' for Abandoning EU Regulations
British Fishing Boat Owner Fined €30,000 by French Authorities
Dutch government falls as far-right leader Wilders quits coalition
Harvard Urges US to Unfreeze Funds for Public Health Research
Businessman Mauled by Lion at Luxury Namibian Lodge
Researchers Consider New Destinations Beyond the U.S.
53-Year-Old Doctor Claims Biological Age of 23
Trump Struggles to Secure Trade Deals With China and Europe
Russia to Return 6,000 Corpses Under Ukraine Prisoner Swap Deal
Microsoft Lays Off Hundreds More Amid Restructuring
Harvey Weinstein’s Publicist Embraces Notoriety
Macron and Meloni Seek Unity Despite Tensions
Trump Administration Accused of Obstructing Deportation Cases
Newark Mayor Sues Over Arrest at Immigration Facility
Center-Left Candidate Projected to Win South Korean Presidency
Trump’s Tariffs Predicted to Stall Global Economic Growth
South Korea’s President-Elect Expected to Take Softer Line on Trump and North Korea
Trump’s China Strategy Remains a Geopolitical Puzzle
Ukraine Executes Long-Range Drone Strikes on Russian Airbases
Conservative Karol Nawrocki wins Poland’s presidential election
Study Identifies Potential Radicalization Risk Among Over One Million Muslims in Germany
Good news: Annalena Baerbock Elected President of the UN General Assembly
Apple Appeals EU Law Over User Data Sharing Requirements
South Africa: "First Black Bank" Collapses after Being Looted by Owners
Poland will now withdraw from the EU migration pact after pro-Trump nationalist wins Election
"That's Disgusting, Don’t Say It Again": The Trump Joke That Made the President Boil
Trump Cancels NASA Nominee Over Democratic Donations
Paris Saint-Germain's Greatest Triumph Is Football’s Lowest Point
OnlyFans for Sale: From Lockdown Lifeline to Eight-Billion-Dollar Empire
Mayor’s Security Officer Implicated | Shocking New Details Emerge in NYC Kidnapping Case
Hegseth Warns of Potential Chinese Military Action Against Taiwan
OPEC+ Agrees to Increase Oil Output for Third Consecutive Month
Jamie Dimon Warns U.S. Bond Market Faces Pressure from Rising Debt
Turkey Detains Istanbul Officials Amid Anti-Corruption Crackdown
×