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Microsoft Corporation (MSFT) Stock: What’s Fueling This Year’s 19% Gain?

MSFT has a favorable mega-trend at its back now that it’s transitioned to cloud and subscription services

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Microsoft Corporation (NASDAQ:MSFT) shares are sitting right around an all-time high, with a 31% gain on the books over the last 12 months, MSFT stock has climbed 19% this year alone.

What’s fueling the gains? MSFT has posted four straight earnings beats, including the one announced on July 20. The company earned 98 cents a share in the most recent quarter against expectations of just 71 cents per share. That monster beat was thanks in part to a $2 million tax write-down from its failed phone business.

But there was plenty of other good news in the report, too.

Redmond, Wash.-based Microsoft posted $25 billion in revenue for the quarter — a 10% year-over-year gain and $1 billion more than Wall Street was expecting. And those strong numbers serve as proof that Microsoft has slowly but surely been successful at making the necessary shifts to stay relevant in the tech world.

Slice of the Pie

Microsoft’s cloud division is perhaps the most obvious proof point. Here’s how CEO Satya Nadella put it in the earnings release:

“Innovation across our cloud platforms drove strong results this quarter. Customers are looking to Microsoft and our thriving partner ecosystem to accelerate their own digital transformations and to unlock new opportunity in this era of intelligent cloud and intelligent edge.”

More specifically, revenue in Intelligent Cloud was $7.4 billion and increased 11% year-over-year, while server products and cloud services revenue increased 15%. Azure revenue growth specifically nearly doubled, and Azure is now the second-biggest cloud business, trailing only, Inc. (NASDAQ:AMZN).

Microsoft also had the “highest number of multimillion-dollar Azure deals to date during the quarter,” CFO Amy Hood noted on the company’s post-earnings conference call. And for the first time ever, Microsoft sold more commercial versions of Office than the traditional version.

This is all great news for MSFT stock and suggests gains will continue.

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Article printed from InvestorPlace Media,

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