Microsoft beat Wall Street expectations for quarterly revenue and profit on Tuesday, as demand soared for the software giant's cloud-based services.
However, its shares dipped 2.1 percent in after-hours trading, following the company's year-to-date run of 30 percent that left investors with high expectations for the quarter.
The pandemic-driven shift to remote work has boosted consumer appetite for cloud-based computing, helping companies including Microsoft, Amazon.com Inc's cloud unit and Alphabet Inc's Google Cloud.
Revenue in its "Intelligent Cloud" segment rose 30 percent to US$17.4 billion, with 51 percent growth in its Azure cloud-computing business, in the fourth quarter ended June 30. Analysts had expected 43.1 percent growth in Azure, according to consensus data from Visible Alpha.
"It's a very impressive report from Microsoft with the company easily surpassing expectations on the performance of almost all business units," said Haris Anwar, senior analyst at Investing.com.
He noted Azure's growth and strong demand for the company's legacy Office and software products.
"That said, Microsoft's stock has made a big run since the beginning of the pandemic, and is trading at rich multiples," Anwar said. "After such a powerful rally, its shares may take a breather, especially when investors are still unclear how the demand scenario will evolve in the post-pandemic environment."
Microsoft's market capitalization stands at nearly US$2.2 trillion, fueling concerns among some analysts that it may be overvalued. The stock has climbed nearly 30 percent so far this year, compared with 18 percent for the overall S&P 500 Index, according to Refinitiv Eikon data based on Monday's closing price.
Revenue from personal computing, which includes Windows software and Xbox gaming consoles, rose 9 percent to US$14.1 billion.
But Xbox content and services revenue dipped, suggesting that a pandemic-fueled gaming boom is beginning to wane, said Paolo Pescatore, an analyst at PP Foresight. The company must strengthen its presence in the home to better compete with rivals, he added.
Revenue rose 21 percent to US$46.2 billion, beating analysts' consensus estimate of US$44.24 billion, according to IBES data from Refinitiv. The company reported earnings of US$2.17 per share, above the consensus estimate of US$1.92.
(Reporting by Akanksha Rana; Additional reporting by Julia Love; Editing by Devika Syamnath and Richard Chang)