"When the Magnificent Seven member reported FY 2026 Q1 earnings on Oct. 29, shares fell despite beating on EPS and revenue. The company announced earnings of $3.72 per share versus analysts' expectations of $3.67, and quarterly revenue of $77.67 billion versus analysts' expectations of $75.33 billion. On Oct. 1, the company announced that it was increasing its Xbox Game Pass subscription by 50%. In its last fiscal year, Microsoft saw more than 8% of revenue derived from its gaming segment, which now boasts 50 million monthly active subscribers and nearly $5 billion in YoY revenue."
"Microsoft navigates challenges, but remains a prime investment due to its AI and cloud dominance. Third-quarter earnings showcased robust demand for its Intelligent Cloud segment, though tariff risks linger. Microsoft's $80 billion cash reserve fuels its $80 billion investments in cloud and AI infrastructure, with over half in the U.S. Its Microsoft 365 Copilot, adopted by , drives productivity revenue, positioning Microsoft to capture the AI market's 37% compounded annual growth predicted through 2030. Similarly, partnerships with over 70% of Fortune 500 firms Oracle for multi-cloud solutions bolster its competitiveness against Amazon's (NASDAQ:AMZN) AWS."
Microsoft's shares experienced short-term declines but retain a year-to-date gain of 14.27% and nearly 35% appreciation since the April low. FY2026 Q1 results showed earnings of $3.72 per share versus $3.67 expected and revenue of $77.67 billion versus $75.33 billion expected, yet shares fell after the report. The company raised Xbox Game Pass pricing by 50%; gaming accounted for over 8% of revenue, with 50 million monthly active subscribers and nearly $5 billion year-over-year gaming revenue. Microsoft reduced about 3% of its workforce (~6,000 employees) for cost discipline. The company holds roughly $80 billion in cash and plans extensive cloud and AI investments, including a $400 million expansion in Switzerland. Microsoft 365 Copilot and multi-cloud partnerships position the company to capture strong projected AI market growth through 2030.
Read at 24/7 Wall St.
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