What's going on?
For your tech entrée, Microsoft – currently the world’s most valuable public company – served up some tasty quarterly results on Wednesday.
What does this mean?
Microsoft’s overall revenue and profit was pretty much what investors predicted. The company’s fast-growing cloud computing segment continued its ascent, with sales there scudding past investors’ predictions, although sales of computer hardware fell short.
The increased cloud cover might’ve been helped by partnerships with the likes of German automaker Volkswagen, which is bundling up Microsoftware with its potentially game-changing electric vehicle chassis (speaking of which, Tesla reported another shocker on Wednesday). Microsoft’s growth appears stratospheric compared to Europe’s largest software company, SAP, which lamented a slowdown in its own cloud growth forecast on Tuesday.
Why should I care?
The bigger picture: Investors on cloud nine.
Investors in any industry look out for companies benefiting from “secular trends” – tailwinds that drive growth regardless of the state of the economy. And Microsoft’s cloud computing business appears to fit the bill. It’s unlikely investors’ focus will shift anytime soon: as well as offering high growth, cloud computing’s lower costs compared to the hardware-heavy servers of yesteryear potentially means bumper cumulative profits for the companies involved.
For you personally: Windows into your investments.
Robo-advisors often buy funds that track the performance of US stocks, and pension managers around the world do too. As the world’s biggest listed company, representing almost 4% of the US stock market, your personal wealth is probably aligned with Microsoft’s share price to some extent, even if you haven’t bought the stock directly (tweet this). While the daily swings in a company’s share price aren’t worth obsessing over, especially when it comes to long-term investments, there’s no denying Microsoft’s slight fall on Wednesday’s news might put a frown on your face.