Microsoft’s revenue growth has, once again, been held by its cloud business and the company expects fiscal 2023 growth to continue to be led by the cloud, as enterprises continue to invest, according to domestic and research firm Nuwama. said it believes in strong revenue growth in the cloud segment. Good for Indian IT services companies as per Microsoft report.
“While we expect some portion of transformation deals to be replaced by cost-carrying deals in the near future, the continued focus on digitalization and ‘cloudification’ should translate into stronger revenue growth. Indian IT companies in the near to medium term,” the note said
Microsoft has guided for a soft growth outlook as it expects continued improvement in Azure’s growth rates given the size of the installed base. In the consumer business, Windows OEMs and Devices are likely to face a sustained decline as the PC market returns to pre-pandemic levels, according to the brokerage.
The company’s ‘Intelligent Cloud’ business, which brings together its server and data analytics services, brought in $21.5 billion in its fiscal second quarter, up 18% year-on-year. Growth of its remote computing platform, Azure, was 31% slower than usual, which drove activity.
“Revenue growth was led by Intelligent Cloud, which was up 18% YoY / 24% YoY in CC. Server products and cloud services revenue grew 20%/26% in CC. Azure and other cloud services revenue grew 31% YoY/38% YoY in CC. Azure growth is lower than the historical trend, though still high given such a large base. We are not concerned about slow growth as the deal pipeline for IT services companies remains high with higher contribution from cost-absorbing deals,” said Nuwama.
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