Microsoft shares hit all-time high on cloud growth

Microsoft's Azure’s quarterly revenue grew 62% from the same time last year

Microsoft cloud computing services boosted earnings in the last quarter, helping send shares to an all-time high.

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Microsoft shares rose as much as 4.58 percent to $175.74 in after-hours trading.

TickerSecurityLastChangeChange %
MSFTMICROSOFT CORP.214.22-5.44-2.48%

Goldman Sachs analyst Heather Bellini said in a note to investors Wednesday that Microsoft's Azure cloud computing business has been growing faster than the broader cloud market. Azure’s quarterly revenue grew 62 percent from the same time last year.

The company reported fiscal second-quarter profit of $11.6 billion, up 36 percent from the same period last year.

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Net income of $1.51 per share beat Wall Street expectations.

The software maker posted revenue of $36.9 billion in the October-December period, up 14 percent from last year and also beating forecasts.

Analysts polled by FactSet expected Microsoft to earn $1.32 per share on revenue of $35.7 billion for the quarter. They are predicting a forecast of $1.24 in earnings per share on revenue of $34.1 billion for the January-March quarter.

Bellini said the company's subscription-based Office 365 workplace software products also remain “front and center” as businesses look to transform their digital operations.

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Price increases that began in October 2018 are continuing to drive revenue, as are Microsoft's moves to phase out older products such as Windows 7, which came out in 2009.

Microsoft's efforts to catch up to No. 1 cloud provider Amazon got a big boost in October when the U.S. Department of Defense awarded Microsoft a $10 billion contract to supply the U.S. military with cloud services for the next decade.

Amazon is protesting Microsoft's award, saying President Trump improperly influenced the bidding process, and asked the U.S. Court of Federal Claims this month to halt any substantive work while its lawsuit proceeds. The Pentagon wants Microsoft to start sooner, arguing that the computing project known as JEDI is urgently needed for national security.

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The project, formally called the Joint Enterprise Defense Infrastructure plan, would store and process vast amounts of classified data.

Microsoft CEO Satya Nadella celebrated the strong profit and revenue in a statement Wednesday, while also calling attention to the company's work “to ensure the technology we build is inclusive, trusted and creates a more sustainable world.”

The Associated Press contributed to this article.