Microsoft accelerates in the cloud, but shares retreat; ServiceNow brings cautious projection for the next quarter
According to an analyst at Bloomberg Television, cloud growth remains strong at Microsoft, while ServiceNow adopts a conservative tone in its guidance.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM BLOOMBERG TELEVISION · 3 MIN
Microsoft presented solid results in cloud and investments (CapEx), but its shares fell after the balance sheet. In the opinion of Anurag Rana, an analyst interviewed by Bloomberg Television on the program "Bloomberg The Close", it is not clear why the shares are falling. ServiceNow released a projection considered timid for the remaining commercial performance obligations (cRPO) for the next quarter.
According to Rana, Microsoft did well in both the cloud and CapEx segments, and margins appear to be reasonable. For him, growth in cloud remains very strong. The analyst also stated that Microsoft 365 commercial revenue accelerated in the quarter, which was expected, and attributed much of the movement to Copilot.
ServiceNow: quarter numbers and caution ahead
In the case of ServiceNow, Rana assessed that the guidance for cRPO for the next quarter was a little light. In the reported quarter, the company performed adequately, with growth of around 21%. The analyst said more details are needed on why the company is adopting a conservative stance going forward.
Rana noted that ServiceNow tends to release lower projections and then beat the number almost every quarter. Asked about revenue linked to artificial intelligence agents, he stated that the company made several acquisitions in the last 12 months, which could contribute to results, and that some of these assets had exposure to Europe and a slowdown.
Copilot, choice of models and the weight of the corporate segment
Regarding Microsoft 365 Copilot, Rana said that commercial growth of around 18% or 19% is very impressive for an old product. According to him, Microsoft allows customers to choose the AI model, whether from OpenAI or Anthropic. As long as this exchange is possible, the company retains much of the distribution value, and customers do not need to develop these functions internally. The analyst said that the company did not disclose the number of paid Copilot seats, but that the topic could come up in the conference call.
For Rana, the corporate segment is the most relevant and the most "adherent" to Microsoft, as companies do not want to deliver consumer applications to their employees and require layers of security. He cited this as one of Microsoft's main arguments for moving customers to higher-value packages.
What to watch for: backlog and corporate demand
Rana noted that Microsoft, Alphabet and Amazon each have backlogs in excess of $500 billion. In its comparison, Microsoft must convert this portfolio into revenue in a shorter period of time than Amazon, whose duration is slightly longer. According to the analyst, Microsoft reported that a third of the backlog should be recognized in the coming quarters, which could improve the growth rate compared to its rival. He further mentioned that Amazon's RPO declined by about $1 billion on a sequential basis.
The central point for the analyst is to know how much of this backlog comes from corporate clients, and not just from companies developing frontier models. For the investor, the reading is that the sustainability of the investment cycle in cloud and AI, with an impact on the Nasdaq, will depend on the quality of this demand.
Automatically translated from Portuguese.
