Microsoft Corporation (NASDAQ:MSFT) announced better-than-expected third quarter earnings after the closing bell on Thursday.
The tech giant reported earnings of US$0.95 per share on revenue of US$26.82bn compared with US$0.62 EPS on revenue of US$22.1bn in the previous year’s third quarter.
The Washington-based company run by Bill Gates beat Wall Street estimates of US$0.85 EPS on revenue of $25.71bn.
Microsoft is holding its own in the cloud platform competition against Amazon Web Services. In the third quarter, Microsoft’s Intelligent Cloud segment brought in US$7.90bn, surpassing estimates of US$7.68bn.
READ: Microsoft posts second-quarter loss after US$13.8bn charge related to US tax reforms
Analysts see promise in Microsoft’s cloud products. KeyBanc analyst Brent Bracelin called the platform his favorite to own in a note and thinks it has strong potential for growth. The analyst reiterated an overweight share rating and a price target of US$110. Wells Fargo analyst Phil Winslow sees the cloud platform bringing the software company back to earnings per share in the mid-teens and increasing its free cash flow.
In January, research firm Gartner Inc (NYSE:IT) stated that worldwide personal computer shipments declined 2% in the year’s fourth quarter. The results mark the 13th quarter of consecutive decline and the sixth year of annual declines. Microsoft’s More Personal Computing segment, which includes Windows, devices, gaming, and search ads, grew 13% year over year. The segment reported US$9.92bn in revenue versus the consensus estimate of US$9.25bn.
Gaming is another area where the Xbox creator has been gaining ground. UBS analyst Jennifer Lowe stated in a note that the gaming segment is evolving through cloud-connected devices and will aid in Microsoft’s growth. Lowe reiterated her buy rating and a price target of US$110. Acquisitions in the third quarter include PlayFab, a cloud-based gaming start-up.
Shares of Microsoft were slightly down in after-hours trading.