Microsoft Stock Earnings News: MSFT gains 5% on earnings beat, decision to complete Activision acquisition

• Microsoft beat Wall Street consensus on sales, revenue for FQ3.
• Cloud revenue rose 22% YoY.
• Personal Computing was the sore segment in the report.
• Microsoft is moving ahead with Activision buyout.

Microsoft (MSFT) stock advanced a solid 5% late Tuesday on the mega cap's hefty beat of Wall Street consensus for the most recently finished quarter (fiscal Q3). Additionally, Microsoft executives said they are going ahead with the Activision deal despite the Federal Trade Commission's (FTC) attempt to block it. 

Microsoft stock news

Microsoft reported adjusted earnings per share (EPS) of $2.45 on revenue of $52.86 billion. This beat Wall Street consensus by 22 cents and $1.85 billion, respectively. Revenue grew 7% YoY despite currency headwinds, while adjusted EPS rose 10.4% YoY.

“Focused execution by our sales teams and partners in this dynamic environment resulted in Microsoft Cloud revenue of $28.5 billion, up 22% YoY,” said Amy Hood, executive vice president and CFO.

The Productivity & Business Processes segment brought in $17.5 billion, up 11% YoY. The Intelligent Cloud segment saw sales of $22.1 billion, up 16% YoY. The Personal Computing segment reported revenue of $13.3 billion, down 9% YoY.

“The world's most advanced AI models are coming together with the world's most universal user interface - natural language - to create a new era of computing,” said Satya Nadella, chairman and chief executive officer of Microsoft. “Across the Microsoft Cloud, we are the platform of choice to help customers get the most value out of their digital spend and innovate for this next generation of AI.”

In Microsoft's Personal Computing segment, the one segment that saw a decline in business, revenues for Windows OEM and Devices dropped 28% and 30% YoY. XBox grew 3%, while Search & News Advertising sales rose 10% YoY.

Notwithstanding the Federal Trade Commission's lawsuit against it, Microsoft said it will still try to close the Activision deal soon. The company's $69 billion takeover of the video game maker will receive a decision by UK regulators on Wednesday this week. The European Union will then make their decision by sometime in June. The FTC case is set to begin hearings in August.

Microsoft stock forecast

The earnings news pushed MSFT stock above both the 21-day and 9-day moving averages, which likely means that bulls could make a run at $294 this week. That level acted as resistance in August of 2022. A close above that line could mean MSFT stock has the backing to regain the March/April swing high at $3.15. The Relative Strength Index (RSI) should not be an issues since its neutral reading comes from the fact that Microsoft stock was in a bit of a downtrend until earnings were released.

MSFT daily chart