Microsoft (MSFT) has updated its quarterly revenue guidance and announced a significant restructuring of its business segments. This move is designed to provide investors with clearer insights into the company’s expanding cloud infrastructure.
Microsoft Restructures Business Segments
Microsoft is shifting certain services from its Intelligent Cloud unit, which includes Azure, to the Productivity and Business Processes segment. This segment, which includes the Office suite, will now also encompass Windows commercial products and cloud services, previously categorized under More Personal Computing.
Additionally, the Power BI tool and Enterprise Mobility and Security products are being moved out of Azure’s growth metrics to better align with actual customer usage. Revenue from search and news advertising, previously under More Personal Computing, will now be attributed to Azure and other cloud services.
MSFT Updates Quarterly Guidance
Following these changes, Microsoft projects a 33% constant-currency revenue growth for Azure and other cloud services in the fiscal first quarter, slightly down from the previous quarter. The company now expects fiscal first-quarter revenue for the Productivity and Business Processes segment to be between $27.75 billion and $28.05 billion, an increase from earlier estimates.
Meanwhile, forecasts for Intelligent Cloud and More Personal Computing revenues have been adjusted downward. Despite these revisions, Microsoft maintains its overall revenue expectation at approximately $64.3 billion.
Is Microsoft a Buy, Sell, or Hold?
Analysts remain bullish about MSFT stock, with a Strong Buy consensus rating based on a unanimous 31 Buys. Over the past year, MSFT has increased by more than 30%, and the average MSFT price target of $504.23 implies an upside potential of 18.8% from current levels.
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