Two days before a slew of big tech firms are slated to report earnings, Microsoft–the world’s third-largest technology company by market cap–posted quarterly results Tuesday after the market close that shattered Wall Street expectations thanks to a surge in sales of its cloud services–a sign that the pandemic continues to be a boon for tech, while other industries continue to struggle.
Redmond, Wash.-based Microsoft reported revenue of $37.2 billion in its first fiscal quarter, up 12% year over year and even more than the $35.7 billion analysts were forecasting.
Net income, meanwhile, soared 30% from last year, hitting $13.9 billion, or $1.82 per share–well above average analyst expectations of $1.54 per share.
Microsoft stock futures ticked up 1% within minutes of the announcement; shares closed up 1.5% on Tuesday and are now up more than 35% for the year.
Demand for Microsoft’s cloud offerings “drove a strong start to the fiscal year,” Chief Financial Officer Amy Hood said Tuesday, adding that the firm’s commercial cloud revenue generated $15.2 billion in the quarter, up 31% year over year.
Tech stocks have far outperformed the broader market this year, with the S&P North American Technology Sector Index surging 29% since January and the tech-heavy Nasdaq up 21%, compared to just 5% for the S&P 500.
The broader stock market failed to make a comeback on Tuesday after stocks posted their worst losses since early September on Monday, as the Dow shed another 200 points on a slew of new earnings data that revealed the pandemic is still ravaging non-tech industries.
“The next decade of economic performance for every business will be defined by the speed of their digital transformation,” said Microsoft CEO Satya Nadella in a statement released alongside earnings. “We are innovating across our full modern tech stack to help our customers in every industry improve time to value, increase agility and reduce costs.”
Amid what could be the height of pre-election uncertainty, hundreds of companies–including about 39% of S&P 500 firms, per Bank of America—report earnings this week, including Ford and Boeing on Wednesday and a slew of big tech firms—including Alphabet, Amazon, Apple and Twitter—on Thursday.