It accounts for about 26% of revenue and is growing in the low double digits. We believe Microsoft 365 is protected by a wide moat driven by high switching costs and network effects.
We assign the segment a wide moat rating based on high switching costs and network effects.
The Productivity and Business Processes segment includes Microsoft 365, Dynamics 365, and LinkedIn. We believe Microsoft’s different segments and products benefit from different moat sources. We view Microsoft as a core holding, and the company’s latest earnings support this.įor Microsoft overall, we assign a wide moat rating arising from switching costs, network effects, and cost advantages. The early feedback on the use of OpenAI within Microsoft’s portfolio is new (if incremental) evidence suggesting the same. The results support the investment case that there is a long runway for Azure growth and that Microsoft’s wide moat remains as strong as ever. Guidance for the June quarter was better than expected for revenue, with cloud storage service Azure at the top end. Bing is gaining share, leaving many to speculate that the OpenAI-based search engine is going to gain more meaningful share versus Google.
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Windows and Surface, which have been under severe pressure, still came in considerably better than expected. All segments were ahead, with More Personal Computing strongest relative to our model. Results were good overall, with meaningful upside to both revenue and earnings per share relative to our expectations. What We Thought of Microsoft’s Q3 Earnings Here’s Morningstar’s take for investors on the company’s latest earnings and its stock. Microsoft MSFT released its third-quarter earnings report on April 25.
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