Microsoft has forecast revenue this fiscal year would grow by double digits, driven by demand for cloud computing services and sending shares up 5%.
The strong outlook shows Microsoft continues to benefit from the pandemic-led shift to hybrid work models and comes at a time when investors are bracing for an economic downturn, with inflation roaring and consumers cutting spending.
Bob O'Donnell, an analyst for TECHnalysis Research, said Microsoft's forecast shows that despite the negative economic trends, companies continue to move more business and work online.
"I don't think it's unique to Microsoft," he said about the outlook.
"Microsoft is extraordinarily well positioned because of the range of businesses it has and the critical role their software and computing services play for organizations."
Despite the positive forecast for the fiscal year starting July 1, Microsoft results for the fourth quarter amounted to a slight miss, hurt by a stronger dollar, slowing sales of PCs and lower advertiser spending.
Still Microsoft had its best quarter for its cloud business with record bookings for its cloud service called Azure, said Brett Iversen, Microsoft's general manager of investor relations.
Azure growth was 40%, missing the 43% analyst target compiled by Visible Alpha. It was up 46% if foreign exchange factors are eliminated. In its broader Intelligent Cloud division, revenue was up 20% to $20.9 billion, ahead of the average Wall Street target of $19.1 billion, according to Refinitiv.
For the first quarter ending 30 September, the Intelligent Cloud division was forecast to bring in $20.3 billion to $20.6 billion, with the upper end slightly above analysts' forecasts.
"We are seeing larger and longer-term commitments and won a record number of $100 million-plus and $1 billion-plus deals this quarter," said CEO Satya Nadella.
"We have more data center regions than any other provider and we will launch 10 regions over the next year."
