Since the last all-time high in early July, Microsoft has been down 11.2%, and since the publication of the results for the calendar quarter Q3 2024 (Q1 2025 based on the company's reporting), the price has fallen 4.05% in absolute terms (i.e. -5.03% relative to the S&P500). See Figure 1. Year-to-date (YTD), the price is up only 10.4% (with the S&P500 +23.1%). Nevertheless, after a very good 2023, the Microsoft price counting from 29-Dec-2022 is still well above the S&P500 (+73.0% vs. 52.9%).
Even if Microsoft's results did not impress investors, as in the last 4 quarters - the underperformance relative to the S&P500 was not significant (see Figure 2).
The Q3 2024 results (quarter ending 30-Sep-2024) were solid, but not enough to impress investors. Microsoft fell 6.1% on the first day after the results were announced.
Total revenue amounted to $65.6 billion and beat expectations by 1.67%. Figure 3.
Investors could be concerned about the declining revenue growth of Azur. The growth in Q3 2024 was 34% (constant currency), while the company forecasts a decline to 31.5% in Q4 2024. See Figure 4. Figure 5 is a comment by AMY HOOD, CFO.
CAPEX amounted to $20 billion and will increase in the next quarter... see Figure 6. Already growing YoY almost 80%!
Amy Hood: "We expect capital expenditures to increase on a sequential basis given our cloud and AI demand signals. As I said last quarter, we will stay aligned, and if needed adjust, to the demand signals we see. As a reminder, there can be quarterly spend variability from cloud infrastructure buildouts and the timing of delivery of finance leases”.
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Figure 7 shows the revenue breakdown by business segments, and Figure 8 shows the revenue breakdown by Products and Services.
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