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$60 Billion Share Buyback: Microsoft has approved a substantial share repurchase program worth up to $60 billion.
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Dividend Increase: The company raised its quarterly dividend by 10%, now paying $0.83 per share.
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AI Investment Growth: Microsoft is heavily investing in AI infrastructure, reporting a 77.6% rise in capital spending in the last quarter due to AI-related projects.
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Azure Cloud Business Outlook: While growth in Azure slowed in the recent quarter, Microsoft expects it to accelerate in the second half of fiscal 2025.
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Investor Focus on AI: Major tech firms, including Microsoft and Google, face pressure to show returns on their significant AI investments.
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Restructuring of Financial Reporting: Microsoft reorganized its revenue reporting, moving some search and news ad revenue under its Azure division.
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Stock Performance: Microsoft shares have risen by approximately 15% this year, with a slight increase after these announcements.
Image Source - Microsoft
In its bid to increase shareholder value, Microsoft reported that its board of directors has approved a new share buyback program at up to $60 billion. The news was made public on Monday.
Quarterly Dividend Increased
Microsoft also declared its quarterly dividend in addition to the fresh share buyback. This is a 10% rise compared to the previous quarter as it rose by 8 cents per share at that time. The company further stated that its annual shareholders meeting will be held on December 10.
AI Infrastructure Spend to Drive Increased
The company in July this year stated that is set to greatly expand the AI infrastructure in this fiscal. The company's capital expenditure increased by 77.6% in the quarter that ended on June 30. This increase was mostly attributable to spending on AI.
Image Source - X
Azure Cloud Business Guide
But Microsoft is optimistic despite the recent slowing of the growth rate of its Azure cloud division. The company said that growth will pick up at a faster clip during the latter half of fiscal 2025.
Pressure from investors on AI investments
Microsoft, along with fellow major tech players Alphabet houses Google, is increasingly being called out by investors to deliver returns on the mammoth monies going into AI infrastructure. Unlike most of its peers that are still waiting for really big returns on their AI investment, Microsoft has proved to be a standout of the big firms in reporting in as much detail as possible AI-related contributions to the bottom line in its earnings.
Image Source - X
Overhauling Organisational Structure
The company changed recently how it consolidates its financial results, reclassifying some revenue from search and news advertising into its Azure cloud group.
Compete with Peers
Peer companies are also paying out capital to shareholders. For example, Apple revealed in May that it would launch a record share buyback program worth $110 billion after reporting good quarterly results.
Image Source - iStock
Stock Performance
After these statements, Microsoft's stock has risen a little bit in after-hours trading. From the beginning of this year, the stock of the company has risen around 15% so far.
With inputs from agencies
Image Source: Multiple agencies
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