Wade Taylor Millward
“The big winner in all of this will be the public cloud, because the public cloud can help businesses offset demand risk,” said Microsoft CEO Satya Nadella.
Cloud vendors are finally acknowledging that the economic slowdown is hurting their profits, but Microsoft CEO Satya Nadella sees the weak global economy as an opportunity to demonstrate demand for public cloud.
Nadella said on Microsoft’s latest quarterly earnings call that the public cloud allows Microsoft customers to control what’s more or less based on demand, which can also help customers deal with rising energy costs.
“However, from a customer’s perspective, the best way for them to align their spending with uncertain needs is to move to the cloud,” Nadella said. “So we’re seeing value underpinning the cloud. So the big winner in all of this is going to be the public cloud, because the public cloud can help businesses offset the risk of demand risk.”
[RELATED: Microsoft Reports PC Trouble, Cloud Growth, SMB ‘Deal Moderation’]
How is Microsoft doing?
While Microsoft CFO Amy Hood handled most of the bad financial news in the company’s earnings report for the first quarter of fiscal 2023 (the quarter ended Sept. 30), Nadella still has plenty to do to showcase the company’s increase. Established and new products.
Azure Arc has more than 8,500 customers, more than double what it had a year ago, Nadella said. Azure Machine Learning revenue grew more than 100% for four consecutive quarters. GitHub’s annual recurring revenue is $1 billion, and more than 90 billion people use the service.
At least three investment banks expressed confidence in Microsoft’s long-term capabilities.
“Our thesis remains that cloud computing and the underlying Office 365/Windows ecosystem will form a larger and larger portion of Redmond, which despite the downturn will ultimately spur growth and profits (and multiples) into FY23/FY24,” Wedbush wrote Dow in a report on Wednesday. “We believe that the transition to cloud is still less than 50% penetration, which is a huge opportunity for Nadella & Co.”
It continued: “Our conversations with clients and partners underscore our confidence that MSFT can weather this economic storm and ultimately be in a better position on the other side with cost cutting and strategic measures taken. “
“Despite cyclical headwinds for Azure and Windows/PC, we remain long-term bullish on MSFT’s hyperscale cloud and integrated infrastructure stack, application development platform, and expanding business application portfolio,” said a Wednesday report from investment bank KeyBanc. .”
Despite a slowdown in SMB consumption and headwinds in Microsoft’s Enterprise Mobility + Security business, a Credit Suisse report said
“Possibly continuing to weigh on near-term growth, we believe the current negative impact of elevated optimization cycles is more temporary. Similar to the optimization cycles that have impacted growth over the past ~1-2 quarters, followed by an uptick in new workloads driving growth back to more normalcy the trend of.”
Here’s more from what Nadella had to say on Microsoft’s latest earnings call.