[Financial Results Summary] Microsoft's sales and profit are up ahead of expectations, and the cloud Azure is also doing well

Stock price reaction immediately after financial results announcement: 4.4% increase due to overtime trading on 4/25
・The benefits of introducing OpenAI's AI technology into our products were also shown in the current financial results.
・The main division was generally strong, and sales of the notable cloud business, Azure & other cloud services, increased 31% compared to the same period last year (AI services contributed to 7 point growth), resulting in high growth exceeding market expectations (29% increase from the same period).
・The use of AI products and services continues to expand.

★ Guidance is also above expectations
・4Q (April-6 fiscal year) guidance: Sales of Azure & other cloud services are expected to increase 30-31% compared to the same period last year (market forecast 29% increase)
・Double-digit sales and operating profit growth are expected for the 2025/6 fiscal year, and the operating profit margin is expected to drop only 1 point compared to the previous year, even considering large investments in cloud and AI.

★ Management's Key Comments
・Our AI innovation has been built and continues to be built on a strategic partnership with OpenAI. Currently, over 65% of Fortune 500 companies use Azure OpenAI, a cloud service that can access the latest OpenAI technology.
・Azure has once again gained market share from competitors. There has also been an increase in earnings due to the move to Azure. The number of Azure transactions of 100 million dollars or more increased by more than 80% compared to the same period last year, and the number of transactions of 10 million dollars or more increased by more than 2 times.
・Windows Copilot can currently be used on 225 million Windows 10 and Windows 11 PCs, an increase of 2 times compared to the same period last year.

★ Changes in target stock prices
Compared to before financial results were announced, the target stock price for 4/26 was raised by 0.6%.

★ Positive comments stand out from Wall Street
・Bloomberg Intelligence: Cloud growth suggests that customers are choosing scalable workloads despite uncertain economic conditions. There is a possibility that the contribution of AI services to growth will be greater than expected.
・Barclays: I've been nervous about financial results for the past few days, but Azure's strong numbers and earnings that completely surpass consensus are enough to confirm a strong equity story.
・Hargreaves Lansdown: Microsoft's significant AI investments have driven profits from its strong cloud business. And the important message is that Microsoft may continue to be the biggest beneficiary of AI demand over the long term when compared to other companies in the same industry.

★ Steadily moving towards the next stage of growth with generative AI
It can be said that the huge investment in OpenAI, which developed ChatGPT, which sparked generative AI, was Microsoft's best investment for the next stage of growth. The benefits of introducing OpenAI's AI technology into our products were also shown in the current financial results.

The use of AI products and services continues to expand, and it is expected that it will support future business expansion. Currently, there may be no sense of undervaluation in terms of valuation, but it can be said that the financial results gave a sense of security as a stock suitable for medium- to long-term holding.