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Gaming, cloud computing, and LinkedIn give Microsoft a lifelineINTL

Gaming, cloud computing, and LinkedIn give Microsoft a lifeline

Microsoft (MSFT) delighted investors after releasing record quarterly earnings. The software titan reported fiscal second-quarter net income rose by more than 30% to $15.5b. Total sales also rose by 17% to $43.1b. Wall Street’s expectations were left in the dust, with analysts predicting net income of $12.6b and total sales of $40.2b.

What drove its earnings for the quarter? Sales of Microsoft’s cloud computing service Azure have expanded rapidly thanks to the pandemic, increasing by 50% in the last fiscal quarter and 48% in the previous quarter.

Thanks to recent acquisitions, video games have also become a large portion of Microsoft’s revenues. Last year, the company purchased ZeniMax Media, the parent company of the popular video game franchise Doom. Microsoft also released their next-generation Xbox consoles last November which contributed to the 40% increase in Xbox content and services revenue.

Business-focused social media platform LinkedIn also pulled its weight, generating a 23% increase in sales for its parent company.

why it matters
Microsoft has been on a tear. Shares of MSFT are up by more than 40% over the past year as COVID-19 lockdowns accelerate the digital shift. Since Tuesday's earnings release, MSFT is up over 4%.