Why Microsoft Stock Just Jumped 4%

What happened

Shares of software giant Microsoft had jumped 4% as of 11:50 a.m. EDT Wednesday after the company reported better-than-expected sales and earnings in its fiscal first-quarter 2022 report last night.

Instead of the $2.07 per share earned on sales of $44 billion that analysts were expecting, Microsoft reported a $2.27 per share adjusted profit on sales of $45.3 billion.

So what

And that wasn’t even the best news. When calculated according to generally accepted accounting principles (GAAP), Microsoft’s earnings actually came in at $2.71 per share for the fiscal first quarter, up 49% year over year — way better than the 25% reported improvement in adjusted profits.

The improvement in earnings was also significantly stronger than Microsoft’s already strong 22% growth in Q1 2022 sales over Q1 2021. Across the board, Microsoft booked improvements in revenue:

• Intelligent cloud sales — up 31%.
• Productivity and business processes — up 22%.
• More personal computing — up 12%.

Now what

And Microsoft plans to keep outperforming expectations in the second quarter, as revealed in the company’s post-earnings conference call, which was covered by TheFly.com.

There, Microsoft confided that it is on course to book revenue between $50.15 billion and $51.05 billion in Q2 — several percentage points faster growth than the $48.9 billion that Wall Street had been forecasting. The results, and the forecast, were good enough to elicit higher stock price targets from a range of Wall Street banks, as analysts from Barclays to Citi to Goldman Sachs hiked their target prices as high as $407 a share on this $324 stock, predicting as much as 25% gains above and beyond what Microsoft is collecting today.

No wonder investors are excited.