I tend to like to group earnings reports rather than handle them individually.
Microsoft had a solid quarter. Quoting the information. 7% higher revenue as growth in its cloud business and commercial software sales helped offset the bottom falling out of devices and PC-related software sales. In contrast, Google’s parent Alphabet eked out just 3% top-line growth, a result of the stalled digital ad market, which accounts for most of its revenue.
Alphabet had some good news to highlight, however. For the first time its cloud computing unit turned an operating profit, of $191 million. You’d have good reason to be wary of that number: Alphabet revealed on Friday that it changed how it allocates costs against its businesses in a way that made the cloud unit’s bottom line look much healthier. Still, let’s not be nitpickers. Google Cloud’s revenue increase of 28%, in a period when companies are scrutinizing spending on IT, is a decent result. And it shows the wisdom of Alphabet keeping its investment in the business, which reduces its reliance on advertising.
Indeed, Microsoft Azure matched Google Cloud in revenue growth, which is impressive given that Azure is bigger. It also performed better in search, with 10% growth, although that’s less impressive given that Microsoft is much smaller in that sector, so it’s easier to post faster growth.
And, Revenue from Office 365 and other business software grew 11% year over year, to $17.5 billion, compared to 7% in the previous quarter. PC-related businesses are down, with Windows revenue from computer makers down 28% and revenue from the devices business that, including Surface, down 30%.
Let’s note something in the Meta earnings calls – while the company overall has managed costs, their Reality Labs group doing the metaverse had their operating loss dip slightly but is still running at an annualized loss of $16 billion.. up from last year.
Finally, Amazon – outperformed on their AWS revenue numbers, which I was watching for. Sales rose about 16%, down from 20% last quarter.
Microsoft is firing on all cylinders and is doing a successful pivot to its new businesses from its old. If you’re a cloud partner, you should be very pleased. Google may just be figuring out this cloud business, and big numbers are hard for Amazon.
But most importantly, Meta is just shoveling money at something that doesn’t appear to be on the horizon for customers. The metaverse isn’t something they are actively selling, also per that earnings call.