Microsoft (NASDAQ:MSFT) share price climbs after a record quarterly profit

The growth story continues for Microsoft in Q1 FY22…

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The Microsoft Corporation (NASDAQ: MSFT) share price is inching higher on Wednesday morning. This comes after the technology titan dished out its numbers for the first quarter of FY2022.

At the time of writing, shares in US-based tech company are up 1.7% in after-hours trade to US$315.35. However, soon after after-hours trading opened, the Microsoft share price set a new all-time high of US$315.89.

What’s moving the Microsoft share price?

Record quarter found up in the clouds

Microsoft shareholders would be jumping for joy following the latest quarterly figures. After the US market closed, the 46-year-old tech company showed investors it’s still got it, posting tremendous growth and expectation beating numbers.

According to the release, Microsoft reported revenue of US$45.3 billion in Q1, representing an increase of 21.9% year-over-year. Likewise, the company achieved US$2.71 of earnings per share (EPS) during the quarter. This was an astonishing 49% higher than the prior corresponding period — as well as being a quarterly record.

Both of these figures were above analysts’ estimates. Although, Microsoft did explain that US$3.3 billion of its US$20.5 billion profit was from a one-time income tax benefit.

Additionally, the continued growth story of cloud featured prominently in today’s numbers. In fact, it was the biggest driver of growth during the quarter. The ‘intelligent cloud’ business segment experienced a 30.6% increase in sales to US$16.96 billion in Q1. This considerable growth is likely pushing the Microsoft share price higher.

Meanwhile, revenue from personal computing increased a more conservative 12% to US$13.3 billion. Reportedly, the PC division was impacted marginally by a slowdown in PC shipments.

All in all, the company’s 22% revenue growth rate in the first quarter is the highest year-over-year growth since 2014. Demonstrating the power of Microsoft’s push into the cloud since the entry of CEO Satya Nadella.

Management and analyst commentary

Despite the lack of high growth in PC shipments, the company’s involvement in multiple technological aspects has meant Microsoft continues to thrive during disruptions.

Commenting on the quarter, CEO Satya Nadella stated:

Digital technology is a deflationary force in an inflationary economy. Businesses — small and large — can improve productivity and the affordability of their products and services by building tech intensity.

Additionally, research firm Gartner believes the weakness in PC sales is a byproduct of the COVID-19 rollout and subsequent reopenings. Specifically, consumers are tending to spend their money elsewhere than electronic goods as they head back out into the world.

In light of this, UBS analysts have a buy rating on Microsoft with a share price target of US$350.

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Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Microsoft. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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