Over the past several years, Microsoft Corp. (NASDAQ:MSFT) has performed amazingly well. The company ended 2016 in the green as the stock was up 12%. Moreover, the stock has displayed positive upward momentum heading into 2017 and is up nearly 4% year to date.
The company recently released second-quarter 2017 results that exceeded market expectations and proved its ability to continue growing at a healthy rate. For the quarter, the company reported earnings per share of 83 cents, exceeding the estimates by four cents.
The company’s gross margin and operating margin surged 3% and 5%. Its revenue came in at $26.1 billion, a surge of 2% year over year. Most significantly, the revenue generated from its company’s cloud-computing business, Azure, surged a whopping 93%.
In the second quarter alone, Azure generated $6.9 billion in revenue for Microsoft, which represents a surge of 8% year over year. Considering the most recent quarter results, it looks like Azure has finally turned itself into the vital growth driver for the company’s intelligent cloud segment.
With each passing quarter, the revenue and profit generated from this platform is escalating swiftly, positively affecting Microsoft’s entire intelligent cloud business. If Azure continues to grow at this rate, it will certainly have a substantial impact on the company’s overall growth in the future.
On the other hand, the internet of things accounts for one of the hottest growth areas. As a consequence, the unstoppable growth in the internet of things market is hastening the desire for artificial intelligence. Data analysis, connectivity and security will necessitate artificial intelligence to function on a large scale.
To meet the above needs, Microsoft is building significant partnerships and making huge investments to shape experiences in the unfolding space. Currently, Amazon (NASDAQ:AMZN) leads the virtual assistant segment with its Alexa-enabled Echo and Echo Dot speakers, but Microsoft is also working to gain a strong lead over its competitors.
The company’s forthcoming Creators Update, especially for Windows 10, will bring Cortana to supported smart home appliances such as toasters and refrigerators.
Apart from this, Microsoft’s cybersecurity platform is displaying positive signs of growth. Over the past two years, the company has made several significant acquisitions to help fortify its position in the cybersecurity segment. Recently, the company introduced Windows Defender Advanced Threat Protection (ATP) for Windows 10.
Windows Defender ATP functions on the back of company’s cloud-based Security Graph, which collects data from windows devices around the globe.
Over the past several years, Microsoft has been heavily rewarding investors. It seems it will continue to do so in the upcoming years. The company is aggressively focusing on the artificial intelligence market to effectively compete against big rivals like Amazon.
Apart from this, Microsoft announced it would introduce virtual reality headsets to compete against HTC Vive and Oculus Rift. Moreover, the company has also been increasing the Hololens’ publicity with various retail partnerships.
It looks like Microsoft is taking every step in the right direction. As an outcome, shareholders should hold the stock for huge gains in the year ahead.
Disclosure: No position in the stocks mentioned in this article.
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