Microsoft share price crash: Slowest sales growth in the last 6 years to blame?
Microsoft's net profit fell on a year on year basis, however strong revenue growth from its commercial cloud computing business helped offset worries around falling revenues from its personal computer business.
Microsoft shares had jumped about 4% after it released its results on Tuesday, January 24, during market hours, but ended the session flat. The company reported a 7% year-on-year drop in its net profit of $17.4 billion. To know more, click here.
Speaking of Microsoft’s cloud business, the personal computer maker forecast that revenue for the next quarter ie. ended March 2023, would be $21.7 billion to $22 billion, just below the analyst average forecast of $22.14 billion, according to Refinitiv.
For the quarter ended December 2022 revenue from the cloud segment beat expectations slightly at $21.5 billion.
Following the chatbot ChatGPT's success in going viral, Microsoft's cloud business is once again in the spotlight.
The chatbot was developed by the firm OpenAI, in which Microsoft has made significant investments and which needs intensive cloud computing resources.
Microsoft also announced, layoffs affecting 10,000 employees as technology companies scatter to cut costs amid rising recession fears.
Microsoft Results: Share Price Performance
Microsoft Results: Weak Net Profit
Microsoft Results: Muted Revenue
Microsoft Results: Revenue Breakdown
Microsoft Results: Expenses Breakdown
Microsoft Results: Business Segment Highlights
Microsoft Results: Top 5 Key Points
Microsoft Results: Analyst View
Guggenheim Securities has a ‘sell’ rating on the stock with a share price target of $212.
Macquarie has a ‘neutral’ rating on the stock with a share price target of $232.
Fundamental Research Corp has a ‘buy’ rating on the stock with a share price target of $269.73.
This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.
How is Microsoft performing financially?
Amid this dynamic environment, we delivered record results in fiscal year 2022: We reported $198 billion in revenue and $83 billion in operating income.
Why is Microsoft stock falling?
Like most technology companies, Microsoft had a rough 2022. Shares fell almost 30%. After doing well in the shift to work-from-home during the pandemic, the company was hit by rapidly rising interest rates, faster inflation and the prospect of a recession in 2023.
Is Microsoft a strong buy?
Based on analyst ratings, Microsoft's 12-month average price target is $283.58. Microsoft has 18.54% upside potential, based on the analysts' average price target.