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Microsoft (MSFT) reported fiscal second quarter earnings with revenue for its cloud business falling short of expectations, posting $40.9 billion versus Wall Street's anticipated $41.1 billion. Overall revenue, on the other hand, beat Bloomberg consensus by posting $69.6 billion, ahead of estimates for $68.92 billion.
"I think this was overall a pretty in-line quarter," RBC Capital Markets Software Equity Analyst Rishi Jaluria tells Julie Hyman and Josh Lipton on Asking for a Trend.
While acknowledging the somewhat "soft" performance in Microsoft's Azure cloud computing business, Jaluria highlights the company's "really strong" commercial and OpenAI bookings. He particularly notes Microsoft's impressive $13 billion in AI's annual revenue run rate (RRR) for the quarter.
"We're in such early stages when it comes to AI," he states, explaining how Microsoft continues to generate AI revenue indirectly. "Microsoft's leadership position in AI absolutely influences other businesses in their portfolio. We've talked about this AI halo effect. As companies come to Microsoft because of their AI, they'll come for other parts of the portfolio as well," enabling broader participation across their various business segments.
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Watch the full video above for additional insights into Rishi Jaluria's outlook on Microsoft and projections for the company's search business performance.
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This post was written by Angel Smith