“Microsoft (MSFT) Q2 2024 Earnings– Over the past year, Microsoft (MSFT) Q2 shares have experienced an incredible run, rising by about 70%, more than double the 22% increase in the S&P 500 index during that same period. This includes increases of over 15% in the last six months, more than doubling the S&P 500 index’s 7% increase.”
KEY TAKEAWAYS
- Microsoft posted better-than-expected net income of $21.9 billion or $2.93 per diluted share.
- The company’s revenue rose roughly 18% from a year ago to $62 billion, driven by growth in the intelligent cloud business.
- The company’s personal computing revenue surged 19%, while its productivity and business processes revenue grew 13%.
Microsoft (MSFT) Q2 2024 Earnings
The software giant and Apple (AAPL) have been engaged in a back-and-forth struggle for the title of most valuable corporation in the world. After Microsoft’s earnings are disclosed, there can be some division due to the competition for market cap leadership. Following the closing bell on Tuesday, the massive enterprise software and cloud company is expected to release its second quarter fiscal 2024 earnings figures. It’s possible that the stock’s momentum is still developing.
| Q2 FY 2024 | Analyst Estimates for Q2 FY2024 | Q2 FY2023 | Year-over-year % change | |
|---|---|---|---|---|
| Revenue | $62 billion | $61 billion | $52.7 billion | 17.5% |
| Earnings Per Share | $2.93 | $2.77 | $2.20 | 33% |
| Net Income | $21.9 billion | $20.6 billion | $16.4 billion | 33% |
A few of the main reasons why investors have fallen in love with Microsoft are its advancements in generative artificial intelligence and the billions of dollars it has invested in OpenAI’s ChatGPT. After starting to commercialize AI, Microsoft introduced Copilot, an AI-powered productivity software suite. Forty percent of Fortune 100 firms currently utilize Copilot, and more than 37,000 organizations have Copilot for Business subscriptions.
The monthly cost of Microsoft 365 Copilot is $30, and according to some analysts, at $30 per user, Copilot has the potential to increase Microsoft’s income by up to $9 billion by the end of its fiscal 2025. According to a Citigroup analyst who reaffirmed a Buy rating on the company and mentioned Microsoft’s GitHub Copilot among other potential opportunities, these optimistic projections might have some merit. GitHub and OpenAI collaborated to produce GitHub Copilot, which will retail for $39 at the end of February.
A cloud-based AI technology called GitHub Copilot helps programmers create code more quickly. It can further accelerate Microsoft’s top and bottom line numbers at $39, especially in light of the company’s Q1 results, which beat consensus expectations by a significant margin and showed better-than-expected growth at its Azure cloud unit, coming in at $56.5 billion, or a 13% year-over-year growth. The company’s guidance for Tuesday will reveal how optimistic management is about the company’s prospects for long-term growth.
The Redmond, Washington-based tech giant is predicted to earn $2.78 per share on $61.1 billion in revenue for the December quarter. In comparison, the same quarter last year had earnings per share of $2.32 on $52.75 billion in revenue. Earnings are expected to improve by 15% year over year to $11.27 per share for the full year ending in June, while revenue is expected to expand by 15% to $243.48 billion.
Notably, from 6% anticipated growth three months ago to 15% projected growth presently, the projected full-year sales growth has more than doubled. The primary driving force behind the company’s artificial intelligence efforts has been its $13 billion investment in Open AI. AI is predicted to increase Microsoft’s market share among business clients by accelerating cloud adoption and enhancing its search skills.
Generative AI “absolutely should be the fastest $10 billion business we’ve ever built,” according to Microsoft CFO Amy Hood. It was evident in Q1 that clients were beginning to recognize the benefits of AI. Thanks to revenue of $24.26 billion from its intelligent cloud unit and $18.59 billion from its productivity unit, Microsoft made $2.99 per share on $56.52 billion in revenue for the first quarter. Revenue from cloud services, primarily Azure, increased by 29% year over year during the quarter.
When Copilot adoption hits double-digit percentage growth annually, which seems likely given these advances, Microsoft stock might rise to $500 per share. For any portfolio that prioritizes performance and reliable execution, Microsoft is still a need-own stock.
