Microsoft Q3 financial report simple review

Опубликовано: 29 Апрель 2024
на канале: ChrisTech

Hey everyone, I'm Chris, welcome to my channel! Here, I talk about all sorts of topics I'm passionate about, like technology, finance, philosophy, psychology, and interdisciplinary subjects. Today, we're diving into Microsoft's third-quarter earnings report.
Microsoft just released their third-quarter earnings, and it's pretty impressive. Their revenue, operating income, and net profit have all grown by about 20% compared to the same period last year, showing some strong growth this quarter. The CEO mentioned, "Microsoft Copilot and Copilot stack are orchestrating a new era of AI transformation, driving better business outcomes across every role and industry." However, despite the big talk, the financials didn't show much revenue from AI. So, it looks like Copilot currently makes up only a tiny part of the company’s total revenue.

Breaking down the numbers, the Azure Cloud computing business accounts for 40% of the total revenue. The other two segments, Business to Business (B2B) and Business to Customer (B2C), each make up about 30%. This means that about 70% of Microsoft's revenue comes from their B2B operations, which shows that Microsoft is primarily a business-focused company. Generally, B2B operations tend to be more stable than B2C.

There are a couple of smaller points worth mentioning even though they don't make up a big part of the revenue. First, Microsoft's hardware business has been declining, and this quarter it dropped nearly 20%. On the other hand, Xbox grew by 62% this quarter, largely due to their acquisition of Activision Blizzard.

Microsoft's current valuation is quite high, partly due to the hype around AI and also because of Microsoft’s business model. The CEO also talked about the company’s AI strategy in the report. But here's where I have my doubts. Even if Microsoft integrates Copilot into Office and other software, I don’t see a strong willingness from businesses to pay for AI just yet. Microsoft seems to be having a tough time monetizing AI, so much so that they hired the former CEO of DeepMind to spearhead AI commercialization. If AI commercialization doesn’t take off in the next few years, Microsoft's valuation might take a hit. To maintain their competitive position, Microsoft will need to rely on their strong B2B moat, keeping businesses within their software ecosystem.

I’ve tried to figure out what Microsoft's core competitive advantage is by looking through years of financial reports, but even after all this time, I still can’t pin it down.

Personally, my cost price is $280 with a 40% stake, and I plan to keep holding. However, I wouldn't recommend buying at the current price—everyone needs to be responsible for their own investments.

Even though US inflation is still higher than expected and the Fed's rate cuts keep getting delayed, we should focus more on the microeconomic aspects like a company’s fundamentals and business models. No one can predict short-term stock prices, but in the long run, good companies tend to grow based on solid performance.

To summarize this video: Microsoft's third-quarter results were strong, and I'm holding onto my shares. If you don't already own them, consider the high valuation and low margin of safety before buying. It's still uncertain whether AI will turn profitable for the company in the coming years. The core strength of Microsoft lies in the stickiness of its B2B services and its pervasive ecosystem. Instead of focusing on the macro environment, we should pay more attention to the company's fundamentals.

If you enjoyed this analysis, don’t forget to like, share, and subscribe for more insights. Let me know in the comments what you think about Microsoft's position or if there’s another topic you’d like me to cover. Thanks for watching, and see you in the next video!

Смотрите видео Microsoft Q3 financial report simple review онлайн, длительностью часов минут секунд в хорошем качестве, которое загружено на канал ChrisTech 29 Апрель 2024. Делитесь ссылкой на видео в социальных сетях, чтобы ваши подписчики и друзья так же посмотрели это видео. Данный видеоклип посмотрели 9 раз и оно понравилось like посетителям.

4,455

106