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What's going on?

Microsoft was the hero investors needed late on Wednesday: the cloud-based crusader swooped in to save the day with an expectation-busting quarterly update.

What does this mean?

Microsoft the second-most valuable public company in the US reported quarterly revenue and profit that eclipsed investors predictions. The tech giant had been in a good position to do just that, with analysts earnings estimates having fallen since the pandemic began. That might seem odd on the face of it: investors mightve expected a boost in demand for cloud computing services and Office 365 from workers who found themselves stuck at home. And they weren’t entirely wrong: Microsofts cloud segment did grow revenue by more than expected, but its productivity business fell slightly short.

Why should I care?

For markets: Zero to hero.


Americas tech-focused Nasdaq Composite index rose 31% last quarter, even as analysts cautioned its tech company-driven rise was going too far, too fast. Those firms, after all, have been forecast to report roughly 10% lower profits on average than the same time last year. And after Netflixs weaker-than-expected update last week sent its shares lower, some investors were worried it was the beginning of the end for tech. Just as well, then, that Microsoft six times the size of Netflix proved them wrong, in turn vindicating the climb tech stocks saw earlier this week (tweet this).



The bigger picture: Rain on sunny days.


The sun mightve shone on Microsofts cloud businesses last quarter, but LinkedIn bought by the tech giant in 2016 didnt do so well. The professional networking platform saw a slowdown in both its advertising revenue growth and its recruitment-related purchases from small- and medium-sized businesses, leading to an announcement this week that it planned to cut almost 1,000 or 6% of its global staff.

Originally posted as part of the Finimize daily email.

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